Mortgage Broker vs Banker
Who should help you finance your Edmonton home?
Getting a home loan is one of the first steps in acquiring a place you can call your own. But, the process of securing that loan may leave you confused and frustrated. There are two primary options for obtaining loans: going straight to your banker or opting for a mortgage broker.
If you’re wondering who should help finance your home, those are basically your two options. But it may be difficult to understand what both options offer. We’ll give you an unbiased overview of the two options to help you make your decision and why choosing a mortgage broker is a better choice based on your needs.
Differences between your Banker and a Mortgage Broker
First, it’s important to understand the difference between bankers and mortgage brokers. As you might have guessed, bankers are a part of banking institutions. In most cases, you would go to your existing bank to apply for a loan. Bankers are considered direct lenders.
Mortgage brokers, on the other hand, are essentially independent of banking institutions. Despite that, they usually have ties to a variety of direct lenders, meaning that they are essentially middlemen between you and the lender. The matchup of a mortgage lender versus a bank may be tough to understand.
What do Mortgage Brokers do?
As mentioned above, mortgage brokers are distinctly different than banking institutions. Their independence from banks allows them to seek multiple different loan programs from a variety of direct lenders. Mortgage brokers are also normally small firms or even individuals who act as middlemen between you and direct lenders. They do not actually dole out loans on their own, but they can help you get there. Other facts about mortgage brokers include:
- Brokers take a commission
- They generally fill out most paperwork for clients
- They shop for rates from different lenders
- They help you select the right mortgage for your financial goals
Once you and the mortgage broker selects a lender, they will handle all the communication for you.
The idea behind mortgage brokers is that they’ll get you the best deal because they can shop around and find the best mortgage based on your financial suitability.
How do Bankers get Mortgages for You?
Your banker is a direct lender. Opting for a direct lender means that you will be a part of the loan process throughout. You will work directly with your bank to secure a loan. Each bank has its own loan programs and products you can choose. Banking institutions include:
- Standard banks
- Credit unions
- Non-bank lenders
- Mortgage banks
During the loan process, you’ll run through all the requisite paperwork and applications with the lender themselves. Again, most borrowers go to bankers with whom they have an existing relationship. But, that’s not necessarily the best option.
You can shop around to different lenders to make your own decision about what’s right for you. But unless you work with a Broker, each bank or lender will need to run their own credit check on your credit bureau score. This can be detrimental to your credit and make you look like a credit seeker.
Mortgage Broker versus Your Banker
So, what’s the verdict when it comes to the matchup of a Mortgage Broker versus a Banker?
When dealing with a broker, all paperwork is handled by the broker so you do not have to deal directly with the lender. They are able to make things seamless and stress free as they understand the process and can explain everything to you along the way.
Mortgage brokers also provide you with an advantage when it comes to which loan to choose from. A bank only has access to one product, their own. A mortgage broker has access to a variety of lenders and mortgage products. Using a mortgage broker helps you find the best deal without the need to go from bank to bank on your own.
Finally, brokers are paid on commission when it comes to traditional mortgages. That means there is no cost to the homebuyer to get expert advice from the licensed broker, who is also under fiduciary duty.
Another thing to look for when making your decision between a mortgage lender versus a bank is the ease of access to your mortgage expert (whether they are a broker or a banker). If you can get a hold of them or see them at a moment’s notice and they keep everything above board, then you’ll likely have a better shot of getting the best loan rate.
What you should do now
If you would like me to negotiate the lowest rate for your mortgage, apply for a quick approval.
If you are serious about learning everything involved when buying a home, go to my "Homebuyer Zone " page where you can read and download valuable checklists and resources.
If you have questions, contact me for more information.