Choice is a great thing. But when you’re faced with many choices, you better know what you’re looking for. If you want to secure a mortgage loan, one of the biggest choices you face is dealing with a bank or a mortgage broker.
Why use a mortgage broker?
A mortgage broker acts as an intermediary between you and the lender. He or she is an expert who knows the lending market and which places offer which products. The broker will shop around to find the best products and rates for your situation and isn’t usually tied to one particular financial institution—and that will save you time and effort. Mortgage brokers also handle much of the paperwork and communication with lenders, saving you the hassle.
However, that assistance comes at a price, as mortgage brokers get paid a commission on your loan. How he or she is compensated and who compensates him or her varies from mortgage to mortgage.
Why go straight to the bank?
If you have a long, positive relationship with your financial institution, going straight to the bank might work for you. Your history could prove favorable, and the bank has the benefit of knowing your financial history—and the risk you may or may not present—which can help your cause. And since the bank is the one giving you the money, it can rule on subjective criteria or make an exception, if needed, that a middleman couldn’t weigh in on.
Of course, one bank won’t offer the full range of mortgage products that can be found across the market. And you’ll have to spend time parsing financial jargon or checking out different banks’ products to compare loan terms.
In the end, it comes down to how you want to approach the mortgage process. If you want an advocate—and are willing to potentially pay for the help—a mortgage broker might work for you. If you feel comfortable with your bank and think your financial history will hold you in good stead, then perhaps taking your business straight to the bank will work well.