Of course, you should use a Mortgage broker.
They will help you to negotiate the lowest rate for you, and because they have high quantities of mortgage products, and mortgage brokers can pass volume discounts directly on to you. On the other hand, the Banks can only offer their mortgage products. So it is better that you should choose the services of the mortgage broker rather than choosing the banks.
Here are some pros and cons of the Mortgage broker and the banks that will help you to know why mortgage brokers are better than the banks:
Pros of using a mortgage broker
- Easy: Finding a good and efficient mortgage broker has never been easier. Generally, you need one meeting, and it can be on call or a meeting in person, whichever suits you the best. Any required documentation is sent through online mode like mails or on other platforms.
- Free: You won’t pay some money to your mortgage broker when you use their services. You can have the services of a loan broker free.
- Better rates: Many mortgage brokers have discount offers from their lenders. This means that you’ll have the access to get lower mortgage rates than you could secure yourself if you try to negotiate on your own.
- Access to more lenders: The mortgage broker will help you to get in touch with many lenders whereas if you go to a bank, you’ll only have access to those loan programs that the bank offers to you.
- Expert advice: Mortgage brokers are the experts at what they do and are professional enough to work with borrowers who may have unique needs.
- Independent: Mortgage brokers are independent and don’t work for one lender, they can have links in several lenders who can help you to choose the best loan for you, and inform you how much amount for the mortgage you can afford.
Cons of using a mortgage broker
- Lack of familiarity: If it is your first experience with a mortgage broker then you have to be more familiar with them so that they can help you to their full extent and provide you better services.
- No access to some lenders: Some lenders do not work with a mortgage broker. So check them before that the mortgage broker is working with the lender or not and big the network of your mortgage broker is.
- More documents may be needed: You might have to provide some extra documentation just for proof as you don’t have a good relationship with the mortgage advisor. So you have to provide documentation for proofs
These were the pros and cons of using a bank for the mortgage
Pros of using the banks for mortgage
- You may have lower interest rates depending upon your financial profile. The bank will check your data and information, and then based upon that they’ll set the interest rates.
- The banks may offer special rates or benefits if you are existing banking customers of them.
- The bank is most likely to continue servicing your loan after the closing.
- The bank may also offer proprietary and specific loan programs to their customers.
Cons of using the banks for mortgage
- The banks have strict lending standards as compared to the mortgage brokers.
- They have less variety of loan products and you have limited options to choose from.
- Less mortgage lending expertise
- The banks charge more fees, due to increased compliance requirements of the customer.
- Cross-selling of additional banking products
- Longer closing times
These were some advantages and disadvantages of both the mortgage broker and banks. This tells that it is better to have a mortgage broker over banks.
What does a mortgage broker do?
A mortgage broker is a financial mediocre who helps home borrowers to get in touch with their potential lenders to obtain the best possible mortgage rates for the borrower. A mortgage broker can save a lot of time for the borrower and get the process easy for them during the application process, and potentially a lot of money over the life of the loan.
Mortgage brokers earn commissions for getting you the loan and it is often known as origination fees. It totally depends upon the amount of the loan and may work independently or as an employee of a big mortgage brokerage firm.
Should I use a mortgage broker?
Yes, you should use a mortgage broker for your home loan because they can help you with a variety of loan programs.
Having a great loan broker is like having a great real estate agent. They get you results with their help that even you couldn’t easily by yourself. Mortgages have a lot of working fields like interest rates, down payments, credit score, and more. A good broker can help you understand all these variables work together and help you to get the best possible loan.
But you should be aware that mortgage brokers work for a commission with lenders. So, they may have an incentive to sell you big amounts of loans or take you towards one lender over another, regardless of what suits you the best. To help ensure that your mortgage broker is working hard for you, keep in mind these three tips:
Get a referral – Get recommendations from friends, family, your mortgage advisor, or a trusted real estate agent that can help you to find an honest, earnest mortgage broker for your home loan.
Ask about fees upfront – Ask your loan broker, if you might have to pay for their services.
Do your math – A broker can help you to know, how much loan do you qualify for, but they will not decide how much you need to borrow or what rates and terms are acceptable to you. That is completely your responsibility.
Why mortgage broker instead of a bank?
It is better to work with a mortgage broker rather than a bank.
Mortgage advisors might get you more loan program options and help you to get the best discounts and interest rates whereas the banks have limited loan programs and they have fixed interest rates and very low discount options. So, it is better to get a get in touch with a loan broker instead of going to a bank.
These were some tips that might help you to choose whether you should choose a mortgage broker or bank for your home loan. If you are looking to get a home loan, we at PierPoint Mortgage will help you to get the best offer and interest rates for your home loan.