Union Home Mortgage Review – Home Loans – Mortgage Broker Versus Banks, Who Should I Use in Cut and Shoot ?
Union Home Mortgage Review – Best Deal Right Now?
Home Loans – Mortgage Broker Versus Banks, Who Should I Use in Cut and Shoot ?
There are a lot of different ways to secure a mortgage, but let’s focus on 2 specific choices, "mortgage brokers versus banks."
There are mortgage brokers, who work as middlemen between banks/mortgage lenders and borrowers on the wholesale end to obtain financing for home buyers.
And there are banks/lenders that work directly with home buyers to provide financing on the retail side.
Brokers play a substantial role in the home lending industry, and can be quite helpful for both potential homeowners and those looking to refinance a mortgage.
There Are Cons and pros to Both banks & Brokers
• Both can be a good choice for home buyers
• But it depends on your loan situation
• And your specific needs
• Compare the two to ensure you receive the lowest interest rate and fees.
There are pros and cons to both, and occasionally you will have no choice between the 2 if you have tough credit scores or a unusual loan scenario.
When it comes time to get a mortgage, the majority of first time home buyers move to banks or established home lenders. They are the best known choice, mainly because mortgage services are usually provided at the customer’s primary banking institution.
This provides for easy shopping, not to mention some level of trust and ongoing engagement. In short, it’s the easy answer for someone preparing to submit a mortgage loan.
However, buyers who have trouble qualifying for a mortgage or need to mortgage tough loans will many times get turned away at the big banks that don’t necessarily focus in home home loans. So for these buyers, using a mortgage broker is often the first option.
Brokers usually have access to many more loan options and types of loans than a establish bank, whether it’s FHA loans, VA loans, jumbo loans, a USDA loan, or simply a borrower with rough credit.
If you go with a broker, you might end up with a more personalized loan experience, where they can carve out solutions to your problems, whether it’s a low down payment, troubled credit history, or the desire to limit closing costs and/or alleviate PMI.
You might feel a bit more included in the home loan process versus using one of the big financial institutions out there, though not everybody needs to speak to a human being, or see them face to face.
There are tons of mortgage lenders and online mortgage lenders that pride themselves on doing the mortgage remotely, via email or even text. No phones required! Well, smartphones yes, actually dialing them no.
The application processes could also be quite different. A big bank might just tell you that your fico score is too low, whereas a broker might explain how credit scoring works, then make options like paying down specific credit cards or student loans to make you eligible in the near future.
The takeaway is that most big banks probably won’t go to the extra effort for you, whereas the broker might seek and find solutions if/when any roadblocks present themselves. And part of that is because a broker can turn to different lending partners, whereas a single bank is at the mercy of its lone suite of loan programs.
For someone who may need a helping hand, or simply wants more attention, perhaps a first-time home buyer, the Broker might be the better option.
What About the Interest Rates?
• Broker rates will likely be better
• Compare wholesale and retail interest rates.
• To ensure you don’t pay too much for your home loan
Of course, pricing with mortgage brokers can be every bit as competitive as a bank, as long as the broker doesn’t take too much off the top. Wholesale rates can actually be much lower than retail interest rates you’ll get with banks, meaning a lower monthly mortgage payment.
For example, I know a mortgage loan officer who works at a Wells Fargo retail bank branch (example of using a bank directly), and his mortgage rates are substantially higher than Wells Fargo’s wholesale mortgage division. And the only way you can access their wholesale rates is through a broker.
Of course, most first time home buyers will attempt to secure their mortgage with their local bank or credit union before turning to a mortgage broker. Banks are seemingly the more trusted and default option, and often provide home buyers with discounts based on a pre-established relationship.
Because the bank already knows a great deal of information about the client, such as the balance of the client’s checking and savings accounts, qualifying can be easier and may result in a more competitive rate.
A mortgage broker will only be able to confirm such information with the home buyer’s cooperation, and may choose not to provide certain information to the lender. This lack of infor…