Obtaining a mortgage is a time-consuming process. Even after doing all the due diligence to find the right bank for you, the loan application and closing process is intense, with a lot of back and forth and requests for documents you swore you'd already provided twice. Usually, a mortgage broker will handle paperwork and disputes with lenders on your behalf; a good mortgage broker will save you time and stress. Getting prequalified for a mortgage with both a bank and a mortgage broker can help you understand your options and compare offers.
While an offer may change once you submit an actual loan application, prequalification will give you a good idea of the rates and terms you can expect. This could help you determine right away if your bank or a mortgage broker is likely to offer you the best rates and terms. You present the pros and cons of using a broker or bank, with no bias toward either option. Banks have the advantage of having more control over the process, where brokers have the ability to find more avenues for a particular loan.
I have seen very intelligent and competent mortgage professionals in both the banking and brokerage sectors. I think brokers are going to re-emerge, as most large institutions are wary of offering loans other than QM. So which one do you choose? A full-service bank ensures that your loan stays with the same company for the entire term. Make sure the bank is servicing its own loans.
On the other hand, a mortgage company can offer quick closures, product availability, and experience in loan originators. However, the individual is often the most important aspect of mortgage lending. Both types of companies have fantastic, knowledgeable loan originators. If you're looking for a type of mortgage that's less common, working with a broker can provide you with direct access to relevant lenders.
I have worked for banks for 15 years and can confidently say that mortgage brokers are always the best option. However, brokers continue to play an important role in the industry and can be very beneficial to both prospective homeowners and those looking to refinance a mortgage. Because mortgage brokers work with many lenders, including major banks, small lenders, insurance and trust companies, and private funds, they often have access to a better rate. The reason is that most bank loan officers have discovered that the key phrase for searching on Google is a mortgage broker.
The best route for you could come down to if you already know a good mortgage broker or a bank loan officer. Nowadays, there is also the option of using a non-bank lender that does not have physical branches or offers deposit accounts, which can result in lower mortgage rates and charges compared to banks and brokers. So, for someone who might need help or just wants more attention, maybe a first-time homebuyer, a mortgage broker might be the best option. If your mortgage application involves challenges, an agent who knows which lenders are most flexible can help you.
Specialty lenders that only provide home loans, such as Rocket Mortgage or Better Mortgage, are generally included in the category of banks. In that case, a mortgage broker can help you find lenders that fit your situation. 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 your preferences. However, borrowers who have trouble qualifying for a mortgage or who need to finance difficult deals are often shunned by big banks that don't necessarily specialize in mortgage mortgages.