While the average age of a home buyer is now almost 50 years old (a nearly 20-year hike since the ’80s), interest in buying homes is prevalent among all age groups. What holds people back from being homeowners are usually financial burdens and lack of transparency into the home buying process.
One of the biggest mysteries when it comes to home buying is the age-old “mortgage broker vs bank” question. Which institution should you trust to service your mortgage?
That’s a big question and one we hope to tackle by sharing with you a handful of pros and cons you’ll face when dealing with either party.
Interested to know how to get the best deal on your house? If so, keep reading to determine who will be your best home buying partner!
Your Wells Fargo’s and Chase’s of the world have long served as a go-to when people have wanted home mortgages. There are good reasons why that’s the case and a couple of not so great side effects that accompany working with these juggernauts.
Here’s what you need to know:
Banks Make Direct Offers
Your average bank is in the business of servicing home loans. That means that when you get your mortgage from a bank, you’re not dealing with a middle-man but the actual lender you’ll make payments to.
There’s power in that seeing as how middle-men tend to take commissions for and may add layers of complication to deals since the more stakeholders you have in a deal, the stickier things can get.
Institutions You Can Trust
Trust is everything when taking out a home mortgage seeing as how homes may very well be the most expensive buys you make in your life. You’ll want to make sure the entity servicing your loan will come through when it comes to being transparent about your partnership.
Fortunately, in most cases, big banks are under enough public scrutiny that they tend to be worthy of your trust. If they say they’re going to do something, chances are, they will.
Special Discounts for Members
The first bank you should look into when getting a loan should be the bank you’ve been a member of for years. Why? Because banks reward long-term members with special loan rates and fee waivers that can put the cherry on top of a great mortgage deal.
Talk to the bank rep you’re familiar with to see what sorts of member specials they may be running.
Looking at the bank’s chief drawback, when you shop for mortgages at a bank, they’re only going to pitch you their mortgage products/rates. The last thing they’re going to do is let you know that the bank down the street is offering a better deal.
This limits your scope into the broader market and may make it so you end up buying into a bad deal.
Now that you know about banks, let’s hop into the broker section of our mortgage broker vs bank discussion.
Mortgage brokers get a bad rap since they’re finders of mortgages rather than givers of them. Unbeknownst to many though, some of the best deals can be found through brokers!
Below is a quick rundown of what to love and what to be wary of when working with a mortgage middle-man:
View Into the Entire Market
The biggest benefit you’ll get with a mortgage broker is that they’ll show you options from possibly hundreds of banks, if not more. Spending just 5 minutes with an award winning mortgage broker could immediately tip you off to how bad the rate your local bank is offering you is in comparison to other institutions in the area.
If you’re a lover of options when making big buys, you can take the work out of finding them by chatting with a broker.
Mortgage brokers are not tied down to rules set forth by banks regarding creditors, home valuations, or anything else. Their job is to reach into the market and pull together a unique arrangement of pieces to make it so you can get the mortgage approval you’re looking for.
For example, if one bank won’t work with your credit score, a broker will find another. If a mortgage giver doesn’t like the assessment their property assessor did on the house you’re interested in, your mortgage broker can find a more favorable assessor to revisit the property.
A good mortgage broker’s creativity may be the only reason why an unconventional home seeker can get into the home of their dreams.
Potentially Higher Cost
The chief concern with brokers is the dreaded mortgage broker commission. Brokers tack certain fees onto the deals they do so they can get paid. When you consider those fees plus the cost of the loan, you may end up paying more than if you just went directly with a bank.
That’s not always the case though!
Mortgage brokers have access to special, wholesale deals you can’t get on your own. Depending on how good those deals are, you could save by going with a broker.
Your Mortgage Broker vs Bank Questions – Answered
After reviewing the pros and cons of dealing with a mortgage broker vs bank, we hope you’re leaving this post feeling more confident.
In summary, there are no binary answers as to which institution is better when it comes to getting a home loan. Knowing for sure will take you exploring your options and seeing what deals are on the market.
We wish you the best of luck in buying your dream home and welcome you to check out more content on our blog for additional guidance!