Which leads to the next point. It is easy to say that people with really high credit scores should go to a bank and everyone else should use a mortgage broker. However, that really does not cover the whole loan scenario. To help you make an informed decision, we have prepared a list of questions for you to use when talking to banks and mortgage brokers. The information you gather from these questions should help you make a decision for your mortgage needs. Here are some general guidelines for each question to help you make the best decision.
Questions 2 and 3: In regards to the fees, some of the items are out of the hands of the mortgage lender. However, it never hurts to ask if the fees can be negotiated down. The down payment will depend on the type of loan for which you are pre-approved. If your lender does not offer the mortgage program that you need for your situation, you will need to talk to a different lender.
This is more a matter of personal preference. It is really important that you are dealing with someone experienced in your type of loan. There are lots of mortgage options available. Although most brokers offer nearly every type of mortgage, this does not mean they have experience with that particular kind of loan. An experienced loan officer can help guide you through the process and make sure mistakes are not made that can cost you the home.
In summary, the financing aspect of buying a home is critical and you should spend time researching and finding a good lender well in advance of starting to look at homes. Real Estate Websites by Sierra Interactive. Home Blog Buying a home. Back to Blog Posts Prev Next. Should I go with a mortgage broker or a bank? The importance of a good mortgage professional: Your Morgage source options: The mortgage expert perspective. The advantaged and disadvantages of each type of mortgage source: As stated earlier, there are advantages and disadvantages to both a bank and a mortgage broker.
Let's start with the bank. Thus, the basic advantages of a bank are: Pre-existing relationship that has been built up over time Ability to draft mortgage payment from existing checking account with ease Convenient to talk to someone that is familiar Competitive interest rates, often extremely low On the other hand, there are some disadvantages to working with the local bank: And now a look at mortgage brokers: Brokers have access to multiple wholesale lenders and can shop around for the best interest rate Offer loans to a wide range of borrowers.
Low credit scores, self-employed individuals, people with fluctuating income and other situations can get approved Possibly better interest rates due to a large pool of lenders Multiple types of loans including most government products like the FHA, VA loan or USDA mortgage and home renovation products such as the FHA k or Fannie Mae HomeStyle loan.
Easy to contact the broker The disadvantages of working with a mortgage broker: Fees for a loan may be a bit higher than a bank loan A minority number of brokers focus on getting the best yield instead of getting the best rate for their customer Your loan will likely be sold once or twice.
How to choose the best lender It is easy to say that people with really high credit scores should go to a bank and everyone else should use a mortgage broker. What is the typical turnaround time for mortgages? What fees are the responsibility of the borrower to pay at the time of closing? Can the fees be included or added to the mortgage?
Can any of the fees be removed or reduced? How much money will I need to pay down on the home? What is your preferred method of communication — text, phone, in person, email? Most brokerage firms are owned by banks because this allows the banks to act as both brokers and dealers , and they have more resources at their disposal to weather market fluctuations.
When banks execute transactions for an individual client, they are considered brokers. However, if they make trades on behalf of the bank as an entity, then they are considered dealers.
Being able to act as both a broker and a dealer allows them more opportunities to profit. Big banks generally have more money readily available than a standalone brokerage company, and they can sustain the big blows that comes with dips in the market. Independently owned brokerage firms tend to make more profit during boom times, but they also suffer greater losses during bear markets.
So while investors may see more a more significant return on their money by going through an independent brokerage firm, working through a bank-owned firm actually provides more long-term security. Another key difference between these two types of traders is that brokers are required to report the amount of commission they earn off of each trade. Dealers, on the other hand, can increase or decrease the amount of a security transaction without having to reveal the actual markup.
Essentially, brokers simply facilitate sales and earn a commission for their work.