The homebuying process is a personal experience and every transaction comes with a unique set of challenges and outcomes. Many first-time buyers favor working with a brokerage as they take the guesswork out of the home-buying process. A residential mortgage broker is essentially the middleman. It’s their responsibility to review the homebuyer’s financial standing and verify employment information, while gathering mortgage loan options from various lenders. The choice between a mortgage broker versus a bank involves weighing different benefits and downsides, as each offers distinctive advantages.
Why work with a broker?
Here are five reasons to consider when opting to work with a mortgage broker versus a bank when buying a home:
- Access to multiple lenders: Brokers have a database at their fingertips and work with a variety of lenders and banks, providing a wider range of mortgage products. Having this type of access often results in finding lower interest rates, better terms, or options tailored to the homebuyer’s financial situation.
- Personalized service and guidance: With the ability to provide a more individualized service, mortgage brokers are especially helpful for first-time buyers. Their level of knowledge and service can help buyers with unique financial circumstances, i.e., self-employment, non-traditional income streams, poor credit etc.
- Time-saving: A mortgage broker does the legwork of communicating with banks and lenders on the homebuyer’s behalf to compare rates, terms and loan conditions, saving them time and energy.
- Better flexibility: Brokers often have access to non-traditional lenders who are typically more flexible with the details of credit scores, income verification and a “set” down payment.
- Greater negotiation power: As many brokers already have established relationships with their lenders, they are sometimes able to waive certain fees and costs, negotiate better terms etc.
Why work with a bank?
Here are five reasons why the homebuyer might opt to work with a bank instead:
- Pre-existing relationship: The homebuyer might have loyalty to their bank and certain benefits available, which offer discounts or simplify the approval process.
- Simplicity: Dealing directly with one financial institution can streamline the process.
- Lower fees: Banks sometimes offer no-fee loans or reduced closing costs to their customers.
- More beneficial for simple/quick turnaround solutions: If the homebuyer has excellent credit and a traditional, straightforward financial profile, the chances of getting a good deal directly from the bank without needing to enlist a brokerage are usually high.
- Potential for a faster closing process: Banks handle the underwriting process internally, often resulting in a faster mortgage closing, especially beneficial if the homebuyer needs quick access to funds.
Ultimately, the best choice comes down to the homebuyer’s individual circumstances and priorities. Regardless of what might have been a biased preference, it’s imperative to research both options thoroughly, compare their offerings, and choose the option that best aligns with your wants and needs.
Landmark Title’s residential team of escrow agents has assisted clients for more than 40 years in the homebuying process. Their expertise and industry relationships with the many stakeholders have given them the unique ability to foretell challenges and roadblocks that may impact a closing. More importantly, their experience offers Landmark Title’s clients insight, knowledge and a personalized approach to deliver solutions and options to overcome any challenges that may arise.
To learn more about Landmark Title and our work, get in contact here.