Mortgage Broker vs. Bank: Who to Work with When Buying a Home Roger Odoardi As a borrower you essentially have two choices when looking to get approved for a home mortgage loan: work with a local/national bank or turn to a trusted mortgage broker. While both paths are perfectly suitable for your pursuit of becoming a homeowner, each route involves a vastly different experience in terms of the service you’ll receive and the mortgage terms you end up with. To better frame the mortgage broker vs. bank debate, it’s important to consider a variety of factors before making a decision. While customer service is paramount, so is working with a professional who possesses an institutional knowledge of the mortgage industry as well as a keen understanding of the mortgage options available for borrowers today. The following is a breakdown of factors you should look at when evaluating whether to work with a mortgage broker vs. a bank. The Mortgage Broker vs. Bank Breakdown 1. Interest Rate Options At the end of the day, it’s all about the rate. And believe it or not, the interest rate you end up with can can be vastly different depending upon whether you’re working with a mortgage broker vs. a bank. A mortgage broker—preferably one that is reputable and/or local—more often than not has access to a range of different mortgage products, each with diverse terms and approval requirements. This is because a mortgage broker is not relegated to working with only one lender, and can instead shop for a mortgage with terms that are in your best interest. And if challenges are encountered during the process of getting approved (i.e. you get denied for a loan), a mortgage broker will remain by your side until you find the right one for you and your financial means. Large national banks typically stick to a pre-determined set of mortgage products and is therefore not always able to shop for the best deal possible. And if you don’t end up getting approved for a mortgage loan—possibly because of your past financial mistakes or shaky credit history—a bank will have little to no choice but to part ways, leaving you to search for another lender, or in some cases a mortgage broker. 2. Customer Service Every business should strive to excel at customer service. However, because the process of getting approved for a mortgage can be innately stressful and equally as confusing, it’s important to seek out the best customer service possible. A mortgage broker is dedicated to one thing and one thing only—getting you approved for a mortgage loan. This means that whatever needs to be done to achieve that goal is their responsibility, including being available nights and weekends. And because brokers are specialists in their field with one mission in mind, you won’t have to worry about them making extraneous attempts to sell you something you don’t need or want. Some banks have a dedicated mortgage department, however, it’s not uncommon for both big and smaller, more local banks to depend on managerial staff to work with borrowers. Because of this, a bank representative helping you with your mortgage may be more apt to try and get you to sign up for a promotion or open a checking or savings account. 3. Experience & Expertise Buying a home and figuring out how you can afford it can be an extremely daunting process — but only if you’re working with the wrong people. This is why finding someone with the experience and expertise in the mortgage industry is crucial. A mortgage broker these days is heavily evaluated and expected to undergo an intense licensing process—thanks to the myriad changes included in the Dodd-Frank financial reform law. Loan officers working within these brokerage companies must also undergo a much more in depth evaluation process in the form of background checks and credit report checks, in addition to taking continuing education courses. All of this is done in an effort to protect you, the borrower, from working with predatory loan officers who are only looking to make a buck. A loan officer at a bank is slowly becoming as scrutinized as mortgage brokers, but it has taken some time. 4. Cost There’s always a cost of doing business, but the amount you will pay when comparing a broker vs. bank is considerably different. A mortgage broker typically has low overhead, meaning they have little interest in charging excess fees and making money off their customers and therefore won’t charge you for their services. Typically mortgage brokers are compensated with a commission through an agreement with lenders, so you won’t have to worry about getting charged things like “walk-in” fees or “processing” fees. Banks, on the other hand, have been known to have their own extra charges—such as application fees, underwriting fees, origination fees as well as the aforementioned fee for “processing.” At the end of the day, a mortgage broker may end up being your best bet—especially if you’re a first time homebuyer. This is because as a new borrower you’ll be expected to meet a number of requirements in order to qualify for mortgage loan. And sometimes meeting these requirements can be challenging, so you’ll want to work with someone who is versatile and nimble enough to find you the best mortgage terms possible—all the while remaining attentive to your needs and your wallet. Blue Water Mortgage is proud of its reputation as one of the most professional mid-sized mortgage broker in New Hampshire, let alone New England. Our team of loan brokers take very seriously the role they play in helping a client find the best home loans with the best rates possible. Contact us today! Roger Odoardi Roger is an owner and licensed Loan Officer at Blue Water Mortgage. He graduated from the University of New Hampshire’s Whittemore School of Business and has been a leader in the mortgage industry for over 20 years. Roger has personally originated over 2500 residential loans and is considered to be in the top 1% of NH Loan Officers by leading national lender United Wholesale Mortgage.