Mortgage Broker vs. Bank Loan

Are you ready to purchase a home? Whether you’re looking for Denver CO luxury condos or a modest starter home in the country, one thing you will have to determine is if you want to obtain your mortgage loan through a mortgage broker or through a bank loan. To help with making this decision, it is important to gain a better understanding of the pros and cons that both options have to offer.

Getting a Loan Through a Bank

When getting a mortgage loan through a bank, credit union or other lending institution, the entire loan will originate from one lending institution. While that institution may have several different types of loans to select from and many employees may be involved in the loan process, the entire loan is handled through just one institution.

Working with a Mortgage Broker

If you choose to obtain a loan through a mortgage broker, you will gain access to the mortgage loan options that are available through a variety of different lending institutions. This is because the mortgage broker does not work for any particular lender. Rather, the broker has forged relationships with dozens of institutions and he uses these relationships to find the best deal to suit your needs. When hiring a mortgage broker, you will have to pay a fee for his services. If the mortgage broker is able to find a better deal than you could find on your own or if the mortgage broker helps you save time, however, this cost may be worthwhile.

Mortgage Broker vs. Bank – Which is Better for You?

For those who do not have the time to compare a variety of different lender options or for those who are uncomfortable with understanding mortgage loans, hiring a mortgage broker a help to reduce stress and confusion. This is also true for those who have poor credit, as finding a loan through a lending institution may be difficult without the help of a broker. When meeting with a loan officer at a bank or other lending institution, you will find that there is no incentive for that person to approve your loan. In fact, if your credit is poor, the loan officer has no reason to take a risk in order to approve your loan. A good mortgage broker, on the other hand, can find a loan for just about anyone with any type of credit. After all, the broker’s income is dependent upon finding a lender on your behalf.

In short, if your credit is solid and if you are comfortable with exploring the mortgage loan options that are available to you, working directly with a lending institution is probably the way to go. If you have poor credit, if you are uncomfortable with comparing loan options or if you simply don’t have time to shop around, hiring a mortgage broker may be the way to go.

About The Author – Brian Kincade specializes in Colorado luxury condos, including Landmark Condominiums Greenwood Village, and is broker of The Home Cart team in Denver, CO.

About Steve Trang

Comments

  1. I think that the thing that is crucial for choosing mortgage broker or a Bank is the time!! However I think that a better option for me personally is the Bank

  2. Thank you for the suggestions you have provided here. This blog post has been very neatly written and is very informative. It helps one judge clearly on whether to go for mortgage broker or bank loan.

  3. We have to really see to it to find time checking what is much better between the two before applying for a loan, as to where is much beneficial for us. But I think I will go the Bank.

  4. Definitely at the bank, of course you have to check first if where is better between the two before applying a loan.

  5. For me.. I will go to bank rather than applying for loan.. Thanks for this great post!

  6. hunterX0506 says:

    I think that the thing that is crucial for choosing mortgage broker or a Bank is the time!! | :P

  7. I think that bank loans is more safe than mortgage brokers even if there is a little bit benefit from brokers but the idea is that we want safety and trusty source even if it will be little bit costly .
    Thank you so much for such great information .
    Sincerely
    Amr Amer
    http://www.akarak.net

  8. Thanks for this post. It gives us pointers whether you’ll go to a bank to loan or mortgage broker. But for me I think I’ll go for bank

  9. I also find that mortgage brokers tend to me more in tune with the local market. You may pay a little more upfront with a broker but you typically get better service and lower rates over the long haul.

  10. Rodrigo Valenzuela says:

    Hi!

    Thanks for the useful post. I would definitely chose a Mortgage broker than go for a bank loan. Broker option is much more convenient.

  11. I have found a few reliable local mortgage brokers in my area that provide much better service and communication than the commercial banks. If there is an issue with underwriting, they are on the phone to get it resolved immediately since they want and need repeat business. I haven’t found the large banks to operate the same way.

  12. good post…I tend to prefer the mortgage broker because you get exposure to more than one bank…the competition gets you more competitive rates…

  13. Until now I never new I should talk to a mortgage broker about getting a loan. I just thought I should go strait to the bank. I think I will see a broker after reading this! Thanks!

  14. A referral from a friend, real estate agent or possibly even from your accountant can give you a good selection of mortgage brokers to pick from. A mortgage broker can then help you sort through the best loan programs available which may not be possible if you focus only on one bank.

  15. If you signed things that were blank I would have to say you just bought and paid for a life lesson. Who does that on something so important as a mortgage? Nobody does that.
    Just admitting you signed blank documents could open you up to prosecution for fraud. Be carefull dealing with BofA. Thats a cash hungry monter that bites. You would be wise to get a financial attorney of your own.

  16. That depends of how much of a loan you are talking about, and if you have the collateral to cover it. It also depends on whether you have “no credit” or “bad credit”.

  17. Mortgage brokers will introduce you to many competitions, needless to say, they also have a preferred one at hand.. just be wise.

    I also like your post, “why your house isn’t selling?’ very nice and informative..

  18. John @Fort Myers and Cape Coral real estate says:

    AS much as I appriciate what mortgage brokers do and their ability to place loans, nothing is worse than when an unproperty trained broker can not close a loan that you have put a lot of work into. I have had an easier time dealing with direct lenders in the past.

  19. Thanks for the useful tips. I agree with you that a mortgage loan is much better than the bank loan. In case of mortgage loan there are no much formalities and it is very easy. Sometimes we can get some time flexibility too.

  20. Leonor Miller says:

    I agree with what Real Estate Reference told above. I think there is no safety when it comes to mortgage brokers. They may refuse that we have paid back a certain amount of installment. Thanks for an thought enticing article.

  21. Thank you for your kind reminding and useful info. Although now I do not have any plan to buy one new house, it is good info to me. To purchase one house is a big expense we need to make clear everything. So I would like to choose to ask for loan to bank. Maybe the bank loan is more familiar to me.

  22. classifieds says:

    Bank loan vs mortgage broker, whichever that can give me more competitive rates

  23. olivia34newton says:

    Very good points about real estate, but still we have to be very careful before making decisions. I guess for me, personally I will choose mortgage broker. I think it’s much safer.

  24. I must agree. This is such a very good point between mortgage broker and a bank loan. Choose the one that has a more competitive rate. Choose wisely.

  25. Francoise says:

    This article is very informative. For me I will definitely choose banks loans than mortgage broker. I think bank loans is much safer than of mortgage. Thanks for providing useful information.2222222

  26. I prefer to go with my mortgage broker.. and when I say ‘my’ I’m talking about a professional who I trust to deliver the best mortgage available. I need to know that the product, i.e. mortgage, can be delivered as promised.

    dee :)

  27. it’s a good thing to know all this information. at least we know which is better between the two.

  28. Antelope Valley Homes for Sale says:

    You explained some compelling advantages to using a mortgage broker and I agree. I’ve worked with some in the past as a real estate agent and I find that my clients are usually happier because they can get the right program to help them save money on their loan.

  29. Iv found it better to go with a mortgage broker i mean how many bank loan officers do you know thatactualy go to the homes and see for their selfs what the homes look and feel like.

  30. Great points. In any case its important to get referrals and make sure you are using a trustworthy lending institution. With so many mortgage scams out there its good to be educated.

  31. Mary W. Mason says:

    Great post! It is very interesting and very intriguing. Well I will go for the bank than having a loan.

  32. Having a great mortgage broker is essential but just like any profession there are good and bad just make sure you work with someone you can trust and rely on.

  33. If you signed things that were blank I would have to say you just bought and paid for a life lesson.

  34. Very interesting and inspiring post…Thanks for sharing this to us..

  35. You and Anna have pointed out two of most important factors when choosing bank or mortgage broker; time and credit. Both, banks and brokers perform a necessary service in the real estate industry.

  36. There is certainly wisdom in both, but as a mortgage broker, I would say there are time when I can compete with a bank, and times there is no way they can compete with me. It really is a case by case arrangement.

  37. I will prefer mortgage broker because the most important thing that one lacks is the time today. Considering this, it’s better to hire a mortgage broker. I know it’s risky but still we should then hire a trustworthy broker. Better hire mortgage broker after consulting with families and friends. Thanks for a really nice article. Keep posting.

  38. I also feel more comfortable hiring a mortgage broker. Their experience provided them with a lot of connections and useful information that would take some time for me to learn and understand. I take my time searching for the right mortgage broker though, in order to be sure he/she can provide me with the best option.

  39. I feel more pampered and cared for with a mortgage broker. I know a lot of experience brokers out there who can provide very satisfying services. It is impressive hearing their suggestions and advices.

  40. Good stuff Brian. Good information for everyone in the RE field.

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