Buying a home is not a decision people make lightly: it’s a big, long-term investment that requires a lot of thought and planning. While you’re planning, you want to make sure you’re getting the best rates on your mortgage as possible, so you might be thinking: “Should I use a mortgage broker or a bank for my home loan?”
What is a Mortgage Broker?
To be rightfully informed about which is the best decision for you, you need to know what a mortgage broker is and their role in the home buying process. A mortgage broker is the mediator between banks and people looking for a mortgage loan, whether it’s for a new home or a new business.
Mortgage brokers are licensed finance professionals in their state who take care of a lot of the heavy lifting and back and forth communications between lending entities to find the mortgage that best fits their client’s needs.
Most of the time, people think a mortgage broker is there to find the best rates, but that’s only scratching the surface of all they do. Their main goal is to find the bank or lender that will agree to the loan that fits best their buyer’s needs. They vet many different banks and lenders to find what will work best for their buyers, negotiate suitable rates on their client’s behalf, handle the required underwriting of your loan, and so much more.
While many homebuyers choose to use a mortgage broker, some decide against it for various reasons, such as they want to find their loan themselves, some lenders choose not to work with brokers, or they don’t want to pay the commission fee that comes along with a broker. However, brokers can help reduce the stress that comes with buying a home and save their clients both time and money by negotiating on their behalf and helping to navigate through the mortgage process.
If you’ve already decided to work with a broker on your mortgage loan, the next step is choosing the right mortgage broker for you.
Mortgage Broker vs. Bank: How Do You Choose?
Mortgage brokers are there to represent you through the mortgage process in its entirety, from the very beginning all the way to closing. At a bank, they have a similar role known as a loan officer.
The differences between a mortgage broker and a loan officer boils down to a mortgage broker represents you, whereas the loan officer represents the bank. A mortgage broker can review many different lenders and negotiate the right rate for you, whereas a loan officer is more constrained by the bank’s offerings.
Having many different lender relationships helps mortgage brokers successfully get the right mortgage loan for their clients, but that doesn’t entirely discredit loan officers. A big advantage loan officers have is being able to handle the loan approval process in-house, normally resulting in a faster approval process and closing date.
Loan officers are also employed and salaried by the bank, meaning their pay stays the same no matter the loan amount or interest rate. A mortgage broker, on the other hand, is oftentimes commission-based, averaging about 1% of the loan total, which is paid by either the lender or the homebuyer.
However, neither option is inherently riskier than the other; mortgage brokers and loan officers are both licensed and recognized as Mortgage Loan Originators (MLOs).
When choosing if it’s better to get your mortgage through a broker or a bank, the most important thing to remember is that your needs come first. Never decide on a loan that isn’t the right fit for you and remember it’s always good to have a list of questions ready when you meet with your lender, no matter who you choose to work with. If you’re not sure what questions to ask, our free Homebuyer’s Guide is a good place to start.
As one of the best mortgage companies in Overland Park, First Fidelis, LLC is ready to help get you the best mortgage to suit your needs. Our team of expert mortgage brokers help homebuyers in Kansas, Missouri, Virginia, Florida, and Mississippi get competitive rates through our wide network of national lenders. Schedule an appointment with one of our licensed mortgage brokers today by calling 913-205-9978.