Banks vs. Mortgage Bankers and Mortgage Brokers

If you know that the end result of your mortgage is going into the hands of a bank, why would you choose to go through a third party mortgage banker/broker? The answer is simple.

How to Choose between a Bank and a Mortgage Banker / Broker

If you apply for a loan directly from the bank, you are at the mercy of the bank’s loan process, interest rates, and approval. This means if you go though the motions of obtaining a loan with a bank just to find out that you are not approved, you will have to move on to the next bank and start the process all over again. This can be really frustrating if the seller is demanding you to obtain a commitment letter. Not to mention that when you are dealing with a lender directly you are stuck with the banks interest rates, but with a broker you are not!

A third party lender will be able to shop around for your loan from different lenders. This process allows you to only have to deal with one party for your loan application. This is more of a hassle free approach for gaining a mortgage since you will only need to obtain a credit report, appraisal and other needed documents for a mortgage application.

Once the third party (mortgage banker or broker) has obtained all the needed documents from you, they will most likely send your application out to about three banks. If the third party gets back approvals from three banks, then all three banks will compete for your loan. Now that you have three banks competing for your loan, they will offer your mortgage banker or broker, who does not care what bank gets the loan, the lowest rates available.

A third party can also act as your ambassador between the lender, attorneys, appraiser, and title company. While a bank can do the same for you, you would more likely have to deal with different departments and not just one person. A third party lender will also have a tighter relationship with venders. This can come in handy if your rushing an approval or find yourself with a an appraisal coming in too low.