When you need a mortgage to buy a home, or when you’re considering refinancing your mortgage, getting the best loan is undoubtedly your primary objective. So, who is the best at shopping for the best loan for you? Is it a mortgage broker, or will you get better products at a bank? Here’s how each stack up in our definitive mortgage broker vs bank guide.
What Is a Mortgage Broker?
A mortgage broker is not affiliated with any specific bank. They instead work for you. It is the job of a mortgage broker to find and then present you with the best options based on your unique circumstances. Mortgage brokers shop for loans for you from a variety of lenders.
Mortgage brokers do not give financial advice. However, they will point out the unique benefits of various products. Once you decide which mortgage product you’d like to apply for, your mortgage broker and their loan processor will submit your application for you, keep you updated on the status of your loan, notify you of additional paperwork required by the lender, and see your loan through to closing.
What Is a Mortgage Banker?
A mortgage banker is an individual who helps home buyers and homeowners to obtain mortgage loans from the bank they work for. Mortgage bankers, also known as loan officers, work for small credit unions and large banks such as Wells Fargo. A mortgage banker can only offer you a loan that their bank offers. They do not shop for loans from other lenders.
Mortgage Broker vs Bank: Pros and Cons
There are fewer benefits to working with a mortgage banker, simply because they have a limited loan product line. For example, if you need a USDA loan, they may not offer that type of loan. However, there may be some instances when getting a loan directly from your bank may make sense.
If you’ve been a customer of the same bank for a long time, you have multiple accounts with them, you have great income and credit, and you need a standard conforming loan, it may be very easy to get a loan from your bank.
Downsides to Working with a Mortgage Banker
Banks may have tighter lending guidelines than other lenders. You may not be approved for a loan even though you’re an excellent candidate for financing. In addition, their rates may be higher than a competitor’s, but they are not obligated to tell you that. Finally, banks do not have to disclose how much they make from you on your loan.
Benefits of Working with a Mortgage Broker
Mortgage brokers, on the other hand, are required to disclose their earnings for originating your loan. Brokers are highly regulated, and various forms and disclosures will spell out exactly what they will earn from helping you with your loan.
Mortgage brokers are often helpful to more people because they work with individuals with a variety of challenges and those who require a non-conforming loan. For example, experienced mortgage brokers know which lenders will approve a mortgage even if your credit score could use some improvement. They also know which lenders are friendly towards self-employed borrowers or those who have a smaller down payment.
Greater Variety of Loan Products
When considering working with a mortgage broker vs bank, it’s important to keep in mind that brokers have a much larger product pool to offer. For example, a bank may only offer purchase loans or refinance loans on single-family homes. Mortgage brokers may be able to help you obtain renovation loans, home construction loans, reverse mortgages, portfolio loans, VA loans, and special loans made available for specific professionals such as teachers, nurses, first responders, and others. And of course, because the primary goal of a mortgage broker is to shop for the best deal for you, not the best deal for a lender, they can often find the lowest rates available for you.
Learn More about Mortgage Loans for a Variety of Properties in Oregon
Of course, the decision to work with a mortgage broker vs bank ultimately rests in your hands. However, at Strategic Mortgage Solutions, we hope our work can speak for itself. We are an established mortgage brokerage that’s helped countless individuals secure the home of their dreams in Oregon. If you need help finding the best mortgage for a refinance, purchase, renovation, or construction, contact us today by calling 541-275-1148, or feel free to send us a message.