Mortgage lenders are often, but not always, less conservative than banks. Therefore, they could be more flexible with respect to innovative applicants, such as those with lower credit scores or higher loan amounts. The application processes can also be very different. A large bank might simply tell you that your credit rating is too low, while a broker can explain how a credit rating works.
Whether you choose to work with a mortgage broker or bank to get a home loan, you should be able to negotiate a favorable interest rate and closing costs. When deciding between a mortgage broker or a bank, focus on what's most important to you. Mortgage brokers save borrowers time and can negotiate their loans with several lenders. While a bank may offer lower relationship prices and closing costs to reward you for being a customer.
In short, mortgage brokers may be a good option if you're looking for a home loan, but you should always compare their rates and services with those of your local bank and credit union to be sure. The reason is that most bank loan officers have discovered that the key phrase for searching on Google is a mortgage broker. If your mortgage application involves challenges such as a low down payment or a low credit score, a broker could help you get a loan product with a better rate. Mortgage brokers are essentially liaisons that work with potential homebuyers to find the best lender for their particular situation.
Remember that if you opt for a broker instead of a direct lender, the broker will charge a commission, which could be significant. There is also the option of refinancing the mortgage if the interest rate is high, but that would start the mortgage again with a completely new term, something you might not prefer if you want it to be paid sooner rather than later. It's usually quite difficult to obtain a mortgage with recent mortgage delinquencies and employment gaps, but take the time to see if someone can make it happen. However, mortgage companies, also generically known as mortgage lenders, tend to offer more options and banks tend to have more stringent lending requirements.
Mortgage brokers work with a variety of lenders, giving them access to many products at many prices. To get the best of both worlds, get loan quotes from at least one broker and bank when looking for a mortgage to see which one can offer you the best deal. Whether it's better to work with a mortgage broker or get a mortgage loan directly from a bank depends on your financial situation and preferences. Mortgage brokers take a request from borrowers and then compare their profile between different lenders to find the best quotes.
A mortgage broker may charge a fee like a real estate agent, but it can also save you time and stress by presenting you with several loan options and advising you through the mortgage loan process. Of course, most borrowers will try to get funding from their local bank or credit union before going to a mortgage broker.