|
How Banks and Mortgage Brokers Differ When you're looking for a home loan, you might work
with an officer at a bank or other lending institution, or you might choose to work with a
mortgage broker. The end result is the same—a new house, but the two types of jobs differ.
Bank Loan Officers
The loan officers at a bank, credit union or other lending institution are employees who work to sell and process mortgages and other loans originated by their employer. They often have a wide variety of loans types to draw from, but all originate from that specific lender.
The loan officer takes your application and works to find a loan product that suits your needs. If your personal credit is approved, the officer moves forward to process the home purchase transaction.
Mortgage Brokers
Mortgage brokers are professionals who are paid a fee to bring together lenders and borrowers.
They usually work with dozens or even hundreds of lenders, not as employees, but as freelance agents.
Think of mortgage brokers as scouts. They find and evaluate home buyers, analyzing each person's credit situation to determine which lender is the best fit for that person's needs. The broker submits the home buyer's application to one or more lenders in order to sell it, and works with the chosen lender until the loan closes. A good mortgage broker can find a lender for just about any type of credit.
The mortgage broker working to secure your loan is earning a fee for that transaction—and the better deal they achieve for a lender, the more they are paid. Don't be too anxious to disclose the interest rate you would be willing to accept, let them tell you what terms they can secure. Shop around to make sure the terms are reasonable.
Many of the mortgages advertised online are by mortgage brokers.
What Difference Does it Make?
Maybe none, but you should be aware of the differences between the two positions. A local or online mortgage broker may find you a lender in another part of the country. An online bank might not have a local office where employees can help you one-on-one.
Some out of town lenders don't understand the types of heating systems used in specific areas, they aren't familiar with private septic systems, and they don't immediately understand common classifications and terms used by local appraisers. Those are just a few examples of problems I've seen that caused significant slow-downs in loans made by an out of town lender.
Using a local bank can sometimes be a plus. Their underwriters generally understand the specifics of local properties, but a distant lender who doesn't will delay closing until questions are answered.
Mortgage brokers can often find a lender who will make loans that a bank refuses. Problem credit is one example. Loans for unique or commercial properties might be easier to secure through a broker.
Make your choice of a lender based on the best loan terms you can find, but ask questions about the transaction's time-frame. Ask for referrals from your real estate agent and from friends who have recently bought a home. There is no overall "best" solution, every buyer's loan needs are different.
|
