Mortgage Broker vs. the Bank – the 3 Reasons Why You Should Use a Broker for a Home Loan
When it comes to buying a home, one of the first things people do is securing their mortgage through a pre-approval. Most buyers go to a bank, but there is another option: the mortgage broker. A mortgage broker is a third-party who works with a number of lenders in order to find the best option for the buyer.
They generally do not offer loans themselves, though many do have a partner mortgage company that is connected to their brokerage. Why are brokers better than working with a bank? Here are three reasons why buyers should look for a mortgage broker.
Lower Mortgage Rates
Brokers have the option of looking at multiple lenders to find those with the lowest mortgage rates, while banks and other direct lenders can only offer buyers their rate.
In some ways, using a broker is a shortcut. Buyers could go to multiple banks to gather information, including their interest rate, before making a decision. However, this takes time, and it’s possible some rates could even change before the buyer has gathered all of the information they want.
A broker can do the same thing in much less time. They can quickly access rates and look at various other factors to help buyers determine which lender is the best option for them. Basically, brokers offer buyers all of the benefits of doing comparison shopping with none of the work.
More Options for Home Loans
Mortgage brokers can also offer borrowers more options, many of which banks simply cannot:
- They can look at various home loans for those who have bad credit.
- They can find lending options for those with specific needs.
- They can find lenders who allow low down payments or have unique income situations.
Many times, brokers are also more knowledgeable about the lending process and the mortgage industry as a whole because that’s all they focus on. Banks and other lenders, on the other hand, may also work on auto loans and other types of credit, so they aren’t truly mortgage specialists.
Beating the Bank Rate and Closing More Quickly
Brokers can beat the bank rate in most cases because they can look at many different options, but this isn’t the only reason why buyers may want to work with one of these experts. Brokers can also often reduce the time it takes to close, especially if they have worked closely with the buyer’s selected underwriter before.
They also often work more closely with buyers and are more available because they are often small businesses with a smaller customer base. Brokers may be more willing to meet outside of standard business hours, too, while other lenders may not be.
All of this means that working with a broker ensure that the mortgage process is easier for the buyer. They typically answer questions more quickly and are easier to get in touch with. This results in fewer issues with the mortgage application itself, reducing the time it takes to complete the paperwork.
All in all, both brokers and banks can help buyers get a mortgage, but working with a broker has a number of advantages. Those who are considering buying a home should consider everything a broker offers.