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Bank or Broker: Where to Go When Finding a Mortgage Loan

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Mortgage LoanOne of the most challenging things to do when you want to buy a home is finding a mortgage loan that’s right for your needs. Homebuyers usually lean on two channels: banks and mortgage brokers. These two channels have their own pros and cons, which you need to assess your needs and preferences in mind.

Below is a more in-depth look at these pros and cons to help you make the right decision: 

Preparing Beforehand

Whether you hire a mortgage broker or go to a bank for a mortgage loan, you can’t qualify for a good one if you don’t have a good credit score. That’s why before you plan to find a mortgage loan, you first need to improve your credit score by avoiding paying your bills late or accumulating more credit. But, consulting a broker is much preferable than a bank if you are still in the process of improving your credit score.

Working with a Bank

The usual pros when working with a bank is that you can build off your existing relationship with them. If you previously worked with a banker from that bank, you can also benefit from a more accountable and trusting relationship. The interest rates are also lower in some cases. The cons, though, include more conservation loan programs, lengthier process, a yield-spread premium is not disclosed, and possible mistakes, false promises, overcharging, and incompetence.

Working with a Broker

When you work with a broker, they’ll handle all the legwork for you. They also compare mortgage rates to ultimately recommend to you the best. Wholesale interest rates are usually lower, there are more loan options, and they are easier to get in touch with. On the other hand, the cons include possible mistakes, false promises, overcharging, and incompetence.

The experience of working with a bank or a broker can be very different but it still depends on who you end up hiring and working with. Be careful so you can find the best mortgage loan to finally buy the home of your dreams.

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