Mortgage Broker or Big Bank- Who Should I Choose?
So you’re looking to purchase a place or maybe refinance your existing place but you’re not sure whether to use a mortgage broker or a bank. Of course, you want to get the best rate and the best deal possible but which one do you choose?
I’ll explain the differences first and let you decide.
Mortgage Broker
As a professional mortgage broker, I have my designation as an Accredited Mortgage Professional. This means that I have ongoing training and courses to stay licensed and proficient in the mortgage industry. I am a professional who works for you and not the lender. I act as a go between the lenders and yourself and am paid a commission from the lenders for securing a good borrower. This means that it doesn’t cost you anything to use my services. I have contacts to many lenders (+60) so I can shop around for the best rates and the best product. Essentially, I do your work for you by getting to know you and your situation, finding out what type of mortgage fits you the best, calculating how much you can be approved for, offering choices in the best lenders and then submitting your application and securing a mortgage for you. Many people say they like dealing with me because I explain the mortgage process in a way that they can easily understand and that I can offer better rates than if they went to the big banks themselves. Some people also say that I helped them get approved even though their credit history wasn’t so hot.
Big Banks
A loan officer at the big bank works for one bank and will only offer their own mortgage. There are no licensing requirements to become a loans officer. A loan officer can sit down with you and talk to you just like a mortgage broker to see what your best fit is in terms of getting a mortgage. You can negotiate with them to get the best deal on a mortgage (e.g. the best fixed rate they have-it is often not the posted rate…you should never accept the posted rate). They get paid by the bank, either through commissions, or salary + commission, or just salary.
So who to choose?
Mortgage Broker Pros:
- I am flexible with my hours and can meet you on your time
- I can often get a very competitive rate
- If your credit score isn’t good, I can find a lender who will take you on
- You don’t have to negotiate, I will do the negotiating for you
- I can offer options and solutions
Mortgage Broker Cons
- The lenders that offer good rates may not be a name you are familiar with
- Sometimes, I can approve you for more, even if your credit score is bad (this can be a good thing too- depending on your perspective)
- There’s no supervisor to complain to if you have a problem with me
Big Bank Loan Officer Pros
- Sometimes, you can see them on your time too (they have mortgage specialists who can meet you in the evenings, or on weekends)
- Big bank- you know they likely won’t close down
- Can have home equity lines of credit
- There is someone to talk to easily if you want to do something with your mortgage, or if you want to talk about changing from fixed to variable or vice versa
Big Bank Loan Officer Cons
- The big con is that you have to be able to negotiate or else you won’t get a good deal
- You have to do the shopping around (go to different banks etc.) which can be time consuming
- Their rates often aren’t as good as mortgage broker rates
- If your credit score isn’t up to snuff, they might not take you on
- You may be dealing with an untrained employee
- You will get pressured to bring all of your business to the bank
So in the end, as always, it’s your choice!
