Mortgage Broker vs Mortgage Banks: What’s The Difference?
If you’ve Googled mortgage companies, you may have noticed that not all mortgage lenders are the same. On one end you have banks, and on the other, you have mortgage brokers – Both eager to tell you why they are the best home for your next mortgage loan!
So, what’s the difference? Well, let’s have a look!
Mortgage Broker Who?
A mortgage broker is someone who acts as a sort of middleman, between you (the homeowner) and the actual mortgage lender who is providing the funds. They help you to prepare loan applications, financial documents and can issue pre-approvals.
Mortgage brokers work with various mortgage finance companies, trust companies, insurance companies, credit unions, mortgage investment coprorations and banks and have the ability to shop around and get creative with your mortgage options. The broker will also take care of all paper-work, and work as your advocate to get approvals and exceptions where normally you might run into trouble. The lenders and banks often pay the broker a commission for a successful closing.
Okay, so what about the banks then?
So mortgage banks actually fund the loan internally. If you work with a bank, they’re going to set you up with their own loan programs. Often times they’ll offer excellent rates, but only if you meet their more strict minimum credit requirements.
But who’s giving me the best deal?
So this is where your head might start spinning – Trying to figure out where you will get the best deal! Unfortunately, it’s not that cut and dry. We’re not dealing in absolutes here, as a mortgage broker will tend to offer better variety and options – And sometimes even a better overall loan since they can submit to multiple lenders at once, and tend to have the experience to know where you’ll get the best deals.
The ultimate goal of a mortgage broker, is to get to know you, understand your current and future needs, source mortgage loans that offer the most flexibility and lower costs to younow and in the future. Then they get those lenders competing for your business to get you the lowest rate on the right mortgage loan for you.
However, the banks will typically give you good rates. But the banks also tend to have stricter requirements, and less flexibility on terms and product. Once again, I have to reiterate that all of this is simply a rule of thumb – Not set in stone!
The best way to figure out which direction will be best for your particular situation is to have a full credit analysis performed by a mortgage professional. Schedule a free, zero pressure 20-minute mortgage review.
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Please visit the Financial Services Commission of Ontario Directory for more information and to check licensing status at http://mbsweblist.fsco.gov.on.ca/agents.aspx