Using a Mortgage Broker vs Bank

By Toni Ryan, First Priority Financial

If you are in the market to buy a home, chances are you'll need a mortgage. Who offers the best option – the bank or the mortgage broker? There are distinct differences to be aware of when making a choice.
• The Bank
The bank offers a variety of programs that they have created based upon their financial return.  Their loan officers are employees who sell those specific mortgages to you. There programs are priced based upon the bank’s costs, ie overhead, etc. If your circumstances fit the specific guidelines, then you will be granted a loan.  This works for clients with great credit, money for down payments and low risk factors. If you do not fit into the guidelines set forth, then there are no options to offer. Special income issues, unusual properties and personal loan requirements are often not considered.
• Mortgage Brokers
Mortgage brokers bring together lenders and borrowers. They usually work with dozens or even hundreds of lenders, not as employees, but as a kind of scout.
They find and evaluate home buyers, analyzing each person's credit situation to determine which lender is the best fit for that person's needs. The broker has choices of lenders so they can search for the most competitive pricing.  They are not tied to one ratesheet. If there are unique circumstances, the broker can fit a lender to those needs. A good mortgage broker can find a lender for just about any type of credit or situation.
 Make your choice based upon your personal needs.  While the best loan terms are important, service is critical. Both a bank and the broker are held to the same laws so always ask for a quote in writing to compare fees and costs. Ask questions about expected time-frames and the loan process. Check with family and friends who have recently bought a home, for lender and broker referrals.  Taking out a home mortgage is an important part of your financial picture – find an expert to fit your needs.