Mortgage Broker vs. Bank

Benefits of Working with a Mortgage Broker vs. Bank:

• Better service and value
• Multiple lenders to work with
• Lower monthly mortgage payment
• Unlimited possibilities to deliver products
• More opportunity to work a deal no matter what the situations are

Believe it or not, there is a difference in whether you get a home loan from a mortgage broker or your bank.

Let’s go over the difference between a mortgage broker vs. a bank and determine which offers a better experience.

A mortgage broker is a financial professional who brings borrowers and lenders together. They are not lenders and do not use their own funds to advance mortgage loans. Mortgage brokers act as a “middleman”, helping consumers by bringing them a variety of quotes from different lenders at one time. They gather important information and documents that lenders require from the borrower, including income, paystubs, tax returns, and credit scores. Mortgage brokers can also work with borrowers who have a hard time getting approved through direct lenders’ automated underwriting process due to recent bankruptcy, poor credit, or unsteady employment.

A good mortgage broker should be able to bring valuable information, such as which lenders offer a specific type of mortgage, and which welcome or avoid applications on loans for specific types of homes like co-ops, condos, or multi-family homes. Mortgage brokers provide the convenience of being a one-stop shop. This eliminates the need to visit multiple lenders to try and get the best rate and, ultimately, approval for a mortgage.

At Mortgage-World.com, we offer a wide range of loan programs for buyers or homeowners. Near-Prime loans require alternative documentation of income or no income verification at all. The lowest credit score to buy or refinance is 500. 

Mortgage Broker vs. Bank

Direct lenders may be banks and other financial institutions. Some direct lenders are private companies that deal specifically with financing mortgage loans for the general public. Many borrowers choose to go with a lender with whom they’ve already done business. The process of applying for a mortgage through a direct lender is the same as it is with a mortgage broker: providing documentation, filling out the application, and waiting for approval.

There is a pitfall to choosing a direct lender and skipping a mortgage broker. You may have to go through the application process with more than one direct lender if the first choice doesn’t come through. Shopping around can be tedious and time-consuming. It can also mean taking a hit to your credit score if you’re applying with multiple lenders within a short period of time.

There are pros and cons when comparing a mortgage broker vs. a bank. However, it is clear that mortgage brokers offer better pricing and service compared to your local bank. Brokers give borrowers more opportunities to qualify for a home loan and, ultimately, get a loan approval.

Is it better to use a mortgage broker or go straight to the bank?

A mortgage broker can offer a wider array of options and streamline the home loan process.

Do mortgage brokers have access to all banks?

A broker can provide you with access to up to 30 different lenders. That is 30 different bank policies, loan products, and interest rates. It would be impossible to do this type of research on your own.

What is the downside of using a bank to get a mortgage?

Banks offer less flexibility for borrowers with unique circumstances. The bank might have stricter underwriting standards that can make it more difficult to qualify.

Can you save money working with a mortgage broker vs. bank?

You can save around $9,400 when working with a mortgage broker compared to a bank.

Written by: Julia Luis, loan officer at Mortgage-World.com, LLC

Julia Luis is a loan officer. Before joining Mortgage-World.com, she was a student at the University of Miami.

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