Commercial Banks vs. Mortgage Brokers
When it comes to getting a home loan, you have a few options available to you in order to come up with the money to purchase the home. This article will focus on two of the most common ways you can borrow money for your home loan. More importantly, it’ll will focus on the differences between these two options.
What is the difference between financing a home loan through a mortgage broker and financing a home loan through a commercial bank?
Well for starters, a mortgage broker acts as a middleman between the borrower and the big banks. Brokers have knowledge and experience with market trends and they analyze the possibility of your loan with several different banks. Commercial banks on the other hand will only show you what their bank offers; a comparison with other banks is not part of the process. Brokers are able to accommodate borrowers who may have an unusual financial situation by doing the footwork for you. Instead of you going from bank to bank finding out who will qualify you, you can give your information to a broker and he searches through his database of banks to find what bank will suit you best.
It’s easy to turn to a commercial bank when you think of applying for a home loan because most of us do our everyday banking with commercial institutions anyway. Commercial banks often offer discounts on home loans because of your loyalty through everyday banking. Borrowers are comfortable with who they are familiar with. Truthfully though, familiarity with your bank doesn’t guarantee them as the best option.
Loan officers also differ depending on weather you decide to go with a bank versus a broker. Mortgage brokers often hold small operations, making the process of your home loan quicker because your file doesn’t have to go through as many hands. A loan officer that works for a broker is likely to be able to give your loan more attention than that of a loan officer at a commercial bank. Broker institutions are more intimate and offer the borrower a more involved experience.
Also, it may be safe to say that loan officers who work for brokers are more knowledgeable about the business. Why? At commercial banks loan officers are required to do the general hours of study necessary to be licensed with the Nationwide Mortgage Licensing System (NMLS). With brokers, loan officers are required to do the same as well as required to be licensed in every state that they will do business in. In other words, LO’s at commercial banks get a general education of the market. LO’s who work for a broker obtain a more in depth knowledge of the market. Their knowledge is not just based on the national standard, but also on the specific standard of each state that they operate in.
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