So, you are ready to get a mortgage so you can begin the process of buying your home. The question that comes up is this: do you use a mortgage broker or go through the bank lender? Each one has its set of advantages and disadvantages.
A Bright Spot
Luckily for you, all of that will be revealed and explained for you in the following article. We will start off with mortgage brokers, defining what it is they do and what the positives and negatives could be for hiring one.
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Featured Rates
FIXED
| Lender | Rate | Term | |
![Mortgage Lendwise Rate](https://certifiedmortgagebroker.com/wp-content/uploads/Mortgage_lendwise_logo.png"){kind=logo} | Lendwise | 1.79% | 5-Year |
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![Mortgage TD Bank Rate](https://certifiedmortgagebroker.com/wp-content/uploads/Mortgage_TD_Bank_Logo.png"){kind=logo} | TD Bank | 1.89% | 1-Year |
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| Term | Rate |
| 5-Year variable | 1.7%(prime - 0.35%) |
| 3-Year variable | 2.6%(prime + 0.15%) |
HELOC
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| HELOC | 4.2%(prime +0.25%) |
OTHER
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| Equity Loans | Starting at 5.99% |
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Mortgage Brokers
A mortgage broker is a mortgage professional. Usually, they have to be licensed and accredited. They also have to maintain their accredited status with continuing education and testing.
What a mortgage broker does is take all of the legwork off of your plate. Your broker will gather information and a credit report. After that, it’s time to talk deals with multiple lenders.
The broker figures out which of the offers would suit your financial situation better while communicating with you and lenders simultaneously. If you accept an offer, the broker will begin the paperwork and be with you until the closing is complete, and you are in your new home. Some of the advantages of using a broker are:
Pros
- A broker uses one credit report to seek out a deal
- The lender pays for the broker instead of you
- The process is done in a timelier manner
- A broker can get lower rates than you
There are some downsides to using a mortgage broker as well. Some of them are:
Cons
- Possibility of referring customers to particular lenders
- Possibility of having to sign with an unknown or small lender
- Option of the broker favoring a particular type of loan
Now, we will look at bank lenders, defining who they are and how they do things, as well as some pros and cons regarding
The Bank Lenders
Bank lenders are a different set of people, and must be dealt with differently. With a bank lender, there is no one in between to make the moves for you. Negotiation, paperwork and everything else would be between you and the bank to complete.
Pros
Bank lenders are open to negotiation. If you are active in this area, you can find out how much flex each prospective lender has out of those that would accept you. Other advantages are:
- Possible extra flexibility if you are a loyal customer
- You’re with a large and established lender
- Possibility of some extra perks on the side
- Possible discounts or other favourable things
Cons
Some of the disadvantages to dealing directly with bank lenders are:
- Rare chance to get the absolute lowest rate
- Some lenders may not work with you
- Banks sometimes do not mention interest rate changes
- Each bank will do its credit report on you
- Adverse credit items from multiple reports
Conclusion
You know a bit about the differences between a mortgage lender and a mortgage broker. When it comes to lending mortgages, an agent can help you get a better deal. Then again, you might be able to do better than that if you negotiate right.
The choice is yours. A broker is far more convenient than going solo, but the ultimate decision falls to you.
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