Should You Choose a Bank or a Broker?
There is no simple answer to the question of whether mortgage brokers or banks offer the best chance to find the ideal mortgage. This is because there are many different mortgage products available and each borrowers financial situation is unique. Further, the products available are subject to constant change and revision, so just because one lender seemed desirable six months ago does not mean it still is today. Nevertheless, there are still a few simple guidelines that can be followed to determine whether to use a bank or a broker.
In general, banks tend to be more conservative in their policies and practices and only offer their own line of mortgage products. However, they also know that the more products they sell to customers, the more likely they are to retain that customers business. For this reason, they frequently offer better terms and discounts to existing customers that are interested in one of their mortgage products. If a potential home buyer already has two or more accounts with a particular bank and has a notable amount of money held there, this bank should probably be the first place to look for a mortgage product.
In the absence of a strong banking relationship then a potential homebuyer may find that a mortgage broker can offer what they need. A broker has plenty of lending options available to them. Good brokers will inspect the financial condition of a borrower to gain a complete understanding of the clients needs. With this knowledge the broker can then recommend the best lender and financial project for the homebuyer. A broker can also help a client with presenting their financial data to a lender and will be a big help in getting the mortgage progress started.
Some brokers charge fees at the beginning but for the most part brokers do not receive payment until the loan is closed. This means that on the one hand, a broker will be highly motivated to get their clients approved for mortgages. However, it also means that brokers may be indiscriminate in getting a client approved for a loan, without real regard to their individual needs. In 2007 the sub-prime mortgage bubble burst and inappropriate mortgage approvals directly impacted that situation.
Once the decision to use a mortgage broker has been made the next step is to make a list of brokers to check into. Start by gathering names from friends and family who have worked with brokers, and also the names of local brokers. Then you can begin to research, making sure they are properly licensed, if there are many customer complaints about their service, and if the broker has had legal difficulties. You can check this information with news sources, the Better Business Bureau, and the Attorney Generals website. At this point the list should only include those brokers that have a sterling reputations and no problems with licenses, legal problems, or customer complaints.
Once the client has a list of several reputable brokers, he should consider going in to initial consultations with several of them. This is because each broker has a unique list of lenders that they deal with, so one broker may have access to a much better product than another. After having initial consultations with several brokers, the home buyer should have a good idea about which one can offer the best product.
Wendy Polisi is the founder of Credit Repair College and Finance the Dream. Credit Repair College empowers people to take control of their financial future by learning everything they need to know to repair credit on their own. For more information on fix credit rating please visit them on the web. Finance the Dream offers lease option houses throughout the United States.
