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Should a buyer use a Mortgage Broker or a Bank?

This is a very important question heard by real estate professionals from buyers on a regular basis. Unlike the loan officers, appraisals and processors who work for the bank as employees or independent contractors, mortgage brokers work for the borrower – their client.

If the buyer chooses to go directly to a bank, the buyer will only be able to take advantage of the limited programs offered by that particular bank. On the other hand, mortgage brokers work with many different banks and lenders that specialize in every type of loan product available on the market. This can ultimately save the buyer money.

Mortgage brokers work with large national banks such as Wells Fargo, JP Morgan Chase and Citimortgage or smaller regional banks. This gives them an edge to effectively shop the market and secure the best product for their client mortgage needs. For example, a bank may have a great rate on a 30-year fixed rate loan, but an above market rate on an interest-only adjustable rate mortgage (ARM).  Their required down payments may be higher as well.  Also, if you are a borrower with a unique income situation, then traditional retail banks may not have a program that will fit your specific needs. 

The variety of lenders available to mortgage brokers allows them to tailor loan and product to each client’s individual situation. They are not bound by the requirements and programs of any one lender, so they can offer the best package to a borrower regardless of which lender is used. In addition, mortgage brokers work with non-bank lenders, which offers programs to borrowers who have special situation or credit issues that need to be addressed. Many of these are sub-prime lenders chose only to work with mortgage brokers due the complexity of such transactions.

In this competitive interest rate environment, lenders often offer pricing incentives to mortgage brokers to bring loans to them. As a result, mortgage brokers are often able to offer better interest rate to borrowers than they would get by going directly to the same lender.

Another benefit of using a mortgage broker is that the mortgage brokers acts as an adviser to the client and, as issues arise throughout the process, the mortgage broker becomes the client’s advocate with the lender. When going directly to a lender, a borrower is only one of thousands of borrowers in a lenders pipeline. However, a mortgage broker has an on-going relationship with each of their lenders, which gives them leverage in resolving issues. They also have priority access to the bank decision makers, which allows them to obtain answers quicker and more efficiently.

I am not saying that all transactions happen without bumps.  If anyone tells you that, don't walk - RUN.  But brokers do have an advantage to spearheading problems that may arise.  Also, if one lender decides not to take the loan, a broker can take the file to another lender all together, whereas a bank cannot.  Which if that happens to a borrower they run into a situation of having their credit pulled multiple times for the same loan transaction.  Be cautious and ask questions.  After doing so, you will get a good feeling for who you are dealing with.

If you would like to speak to a mortgage brokers office directly
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