WOOLCOTT -Mortgage Lender or Broker

Posted on July 9, 2019 at 2:12 pm by & filed under Buying a Home.

There’s no doubt that purchasing a home can be complicated. And for many buyers, applying for a mortgage is one of the most confusing steps. It’s not just the logistics of getting a loan that can be tricky—it’s also figuring out where to go when you need one. While banks are often considered the obvious go-to, mortgage brokers are becoming more popular by the day. The truth is that both options can come with benefits and drawbacks, and the one that’s right for you will depend on your home-buying needs, goals and preferences.

If you’re ready for a mortgage and can’t decide between a bank or a broker, consider these major pros and cons…

Brokers: the pros

Now more than ever before, home buyers are turning to mortgage brokers when they need financing. There are a few reasons why you might want to follow their lead.

Access to more financial products

If you go to your bank for a mortgage, they’ll only offer you their own financial products and services. Not so when it comes to brokers, who can present you with many different options from various lending institutions. The advantages can range from lower interest rates to better terms and conditions.

Less leg work for you

If you work with a broker, they’ll shop around, find the best deals out there, and present them to you. In other words, you won’t have to spend your time and effort scouring the marketplace—and you can avoid a whole lot of stress.

They specialize in mortgages

Brokers are completely focused on mortgages, which are their sole area of expertise. As a result, they devote a lot of their time to maintaining ongoing relationships with lenders—including some you may not find on your own. Brokers also know who you shouldn’t work with (due to hidden fees and other often-overlooked issues).

Brokers: the cons

While there are a whole lot of potential benefits associated with going the broker route, there are also some reasons why you might choose to work with your bank instead.

A broker doesn’t know you

You have a preexisting relationship with your bank, and they know your financial situation inside and out. In contrast, a broker may not have the same in-depth understanding of how different mortgage options will impact your debts, your investments, and your future plans.

They may be less stable

There’s a certain amount of peace of mind associated with choosing one of the big banks. They’re established and efficient, which can mean less risk on your end. Having said that, it would be a mistake to assume that working with a broker is hazardous. To reduce any potential risk, do your homework and ask the right questions.

Banks: the pros

Though many home buyers have begun turning to brokers for their mortgages, many remain loyal to their banks. Here’s why you might consider doing the same.

Your existing relationship

Put simply, you know your bank. Thanks to firsthand experience, you’re already familiar with how they do business. That level of trust can translate into fewer questions and less confusion on your end, which will likely mean a smoother process and less stress overall.

They can provide the big picture

Your financial history can be very helpful when it comes time to apply for a mortgage. Your bank knows your account balances, your credit card payments, and more. Armed with this information, they’re in a good position to provide you with efficient service—and help you achieve your short and long-term goals.

A sense of security

The big banks offer a great deal of stability, and they have well-established processes in place. Many borrowers just won’t get the same feeling of security from working with a broker as they will from a major financial institution.

Banks: the cons

There are a few potential cons associated with getting a mortgage from your bank. Here’s the biggest.

Access to fewer products

Of course, the biggest potential downside of working with a bank is the fact that they’ll only present you with their own products. When you have fewer options, you might not wind up with the best deal available. The good news is, you may be able to negotiate with your bank for a lower rate than they offer right off the bat—and your pre-existing relationship could go a long way if you do.

At first glance, obtaining a mortgage can look pretty complex. So it’s no surprise that many first-timers get tripped up when it comes time to start the process. The good news is, you have a choice. With a bit of consideration and some advice from a real estate agent who knows the local lending landscape, you can find the solution that will work for you.

Are you ready to buy your dream home? We have the knowledge and experience to act as your guides at every step. Get in touch—we’d love to help!

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