Are you getting ready to call your bank to kickstart the homebuying process? Don’t. In spite of its eye-catching advertising, banners and brochures, your bank is probably not the best place to start. A mortgage broker–a professional who shops for the best products to meet your individual needs–is usually a much better choice. Here are 4 reasons why.
1. Mortgage brokers’ rates and fees are generally better than banks. Brokers are intermediaries between lending organizations and consumers. Because this eliminates the lenders’ need to interface with or advertise to the public, working with a mortgage broker usually results in lower fees and better rates than banks. It’s essentially the difference between a wholesale mortgage and a retail one.
2. Mortgage brokers’ income is tied to your successful mortgage experience. If your deal doesn’t close, brokers don’t get paid. If your experience isn’t smooth, or you don’t close on time, you won’t refer them to your friends, neighbors and co-workers. Contrast this with banks. In most cases their employees will get paid–even if they botch your deal or don’t provide service that inspires referrals.
3. Mortgage brokers are available evenings, weekends and holidays. If you want to make an offer on a house on Friday night, how soon will you get a prequalification letter? Most sellers require this letter to be provided with your offer. Most banks won’t help you until Monday morning at the earliest. On the other hand, many mortgage brokers provide their cell phone numbers and are happy to get you what you need, when you need it. This gives you a big leg up when submitting offers.
4. Mortgage brokers start with your needs rather than their products. Banks only have their loan products, which limits a buyer’s options. Brokers have a variety of lenders they work with, so they tailor their recommendations to their buyer clients and search out the best deals for them.
In our experience, the smoothest transactions happen when mortgage brokers handle the loan instead of banks, since they generally have more control over the process than bank employees do. As with most industries, though, there are exceptions to this generalization. How can you know for sure? If you plan to use a bank as a partner for your home purchase, interview at least one or two mortgage brokers and compare service, prices and products. In most cases, the mortgage broker will come out on top.
If you want some options, the Egan Team has worked with several high quality, service-oriented brokers. Contact us for their contact information, or download our Homekeepr app, which provides contact information for all of our recommended professionals and contractors.
Finally, here’s a quick video that helps you see the big picture.