A common question asked by those seeking a mortgage is whether or not to use a mortgage broker or a bank as their lender. While both may seem to offer the same services, each comes with its own set of stipulations and provisions. Let’s a take a look at the difference between a mortgage broker and a bank when it comes to borrowing money for a home purchase.
Big Banks & Financial Institutions
Most people who are in the position to be a buying home have already available credit and have most likely built some kind of rapport with their bank over the years. This kind of comfort level can be a major plus for people who are nervous about applying for a mortgage, or even those who don’t understand all that the process entails. Often people find working with a major financial institution to be more comforting and it gives them a feeling of financial safety. Another big plus that people find when applying for a mortgage via their bank of choice is that all of their accounts are linked together in one place. Again, this type of convenience and comfort works best for those who are unsure of the process and who’ll want to feel as though their financials are in one conducive place.
However, though there are pros there are also a few cons. Applying for a mortgage via a major financial institution can also bring about some unfavourable hiccups and roadblocks in your mortgage process. For one, banks often don’t have mortgage specialists on site all the time for any questions or concerns you may have. While they may have employees who handle their company’s mortgage loans, it is rare that a financial institution will have those with a field of expertise specifically geared towards mortgages. Along with that, comes the lack of flexibility. Since banks can only show you what they themselves offer, there is not much room for comparison of other institutions, not to mention comparison of their terms and conditions. Most often a bank has set bureaucratic rules put into place and a “no exceptions” policy when it comes to negotiating rates and mortgage deals. A mortgage application is a lengthy process, and having no wiggle room in your final agreement can make it seem daunting, overwhelming and even unfair.
While a broker themselves may be a tad biased in the comparison, there are plenty of reasons why applying for a mortgage with a broker can be a better choice. To begin with, a broker acts as a middle man for numerous financial institutions, so automatically, you are getting a variation of rates and stipulations to contrast and compare. Not only does this allow you to get the best possible mortgage agreement for your needs, it also gives you a better understanding of your options and even some wiggle room with negotiations. To add to the fact that brokers give you multiple options, they also do all the leg work in any findings. Especially for first time home buyers, mortgage research can be intimidating, but a broker essentially steps in to help you with your homework and works on your behalf to find what you need while lessening the stress from the overall process.
As far as policies and procedures go, mortgage brokers tend to be able to be a little more lenient. Basically, because they formulate their own set of rules and precedents, they are able to be more flexible and can finance tricky deals a little easier. This also stems from their expertise. As mentioned earlier, while banks do have mortgage “specialists”, their education, experience and expertise is often less than an actual mortgage broker. Mainly due to the fact that a broker is specifically trained in a set area of financial service, whereas a banker would have a broader range of training in order to best assist the bank.
While the argument of banks versus brokers can go back and forth, both with pros and cons, it really comes down to what makes you feel most comfortable. While some prefer a large financial corporation to handle their mortgage affairs, others would prefer a more person-to-person approach with ample options. If you have any questions regarding using a bank or a broker to secure your mortgage loan, don’t hesitate to give me a call at 705-315-0516. I am always happy to help guide you and your family to financial stability with ease when it comes to owning your own home.