Are you preparing to buy a house?
A house is one of the biggest assets you’ll ever own, so congratulations are in order. If you’re buying in cash, the process is fairly straightforward.
However, if you’re getting a mortgage, there are a number of steps you have to complete along the way. There are also a couple of big decisions you’ll have to make. One such decision is whether to work directly with a lender or hire a mortgage broker to assist.
Which way should you go?
Continue reading this mortgage broker vs lender to obtain all the information you need to make a sound decision.
The Ins and Outs of Dealing Directly with a Lender
Taking out a mortgage is pretty much like taking out any other type of loan. You need to find a lender and apply for the loan.
However, since a mortgage application is a multi-step process, most people often need help along the way. And to get this help, you can choose to hire a mortgage broker. This professional will do most of the work on your behalf.
Dealing directly with a lender means you’ve elected not to hire a mortgage broker. It’s you and the lender. No one in between.
The Advantages of Working with a Lender
Working directly with a lender has some advantages.
The first major benefit is you’ll save money. Hiring a mortgage broker potentially means you have to pay them for their services, although some brokers are paid by lenders.
If you’re on a tight budget, the last thing you want is to pay someone to do something you can do. When you work with a lender, you won’t worry about commission and fees to third parties.
Another benefit of working with a lender is you have the opportunity to leverage the good relationship you may have cultivated with your lender. You see, when you’re going in for a mortgage, you’ll most likely want to approach your local bank. If you’ve banked with this institution for a long time, you’ve built a relationship.
You can use this relationship to, for instance, negotiate a lower interest rate on your loan. Because the bank knows you, they might actually offer you a lower rate, lower than you could have gotten when working with a mortgage broker.
There’s a sense of control you get when you’re dealing with a bank or other lender. You’ll know how everything is going on since you can call or visit your loan officer when you want. With a mortgage broker, you won’t know much about what’s happening.
The Disadvantages of Dealing with a Lender
If you’ve got no mortgage application experience, you’ll likely make mistakes when you do it on your own. There’s lots of paperwork to be filled and without a professional on your side, it’s easy to miss something or make a clerical error. These errors will only lengthen the amount of time it takes for your loan to be approved.
If your credit isn’t good and your income is shaky, you might be shooting yourself in the arm by working directly with a lender. Your application could be denied.
The Ins and Outs of Working with a Mortgage Broker
A mortgage broker is an independent professional who helps mortgage borrowers secure mortgages. These professionals aren’t employed or affiliated with any mortgage lender. They earn their money when a borrower or a lender pays them a commission or fee for their service.
The Advantages of Working with a Mortgage Broker
The biggest advantage of working with a mortgage broker is you get unbiased counsel. They have no interest in ensuring you get a mortgage from a certain bank, so they’ll help you find a product that meets your needs.
When you work with lender A, for instance, its loan officers will try as much as they can to ensure you take their mortgage. This doesn’t necessarily mean A’s mortgage is the best.
Mortgage brokers have a strong handle on various lenders and their mortgages. They’ll use this knowledge to help you find the best home loan. If your goal is to get the lowest interest rate, for instance, your broker already knows the lenders offering the lowest rates.
Another major benefit is you’ll save time. You already know that mortgage application is a multi-step process and there’s lots of paperwork involved. On your own, and if you’ve got no mortgage application experience, you’re likely to waste a lot of time.
A mortgage broker will do the job for you within the shortest time all while keeping everything accurate.
A home loan broker will also improve your chances of getting your application approved. These professionals know how to negotiate and get you a deal, especially if you’ve barely met the requirements for approval. So, find a mortgage broker if you’re afraid your financial situation isn’t ideal.
The Disadvantages of Working with a Mortgage Broker
If you’re on a tight budget, you don’t want to work with a mortgage broker. If you have to, ensure they’ll be paid by your eventual lender.
It can also be challenging to find the best mortgage broker in your area, considering that there might be tens or hundreds of them.
Mortgage Broker vs Lender: Have Your Pick
In the mortgage broker vs lender battle, it’s you, the borrower, who holds the card. Although working with a mortgage broker is recommended, it’s not always necessary. With this guide, you’re now in a better position to make an informed decision.
Keep reading our blog for more tips and insights.