(Newswire.net — September 10, 2018) — Buying a home, whether it’s your first or your third, will always be a huge investment to undertake. Not everybody has the means to buy a house outright, and even those who may have the means to do so would rather not. It’s for this reason that most home buyers opt into working through a mortgage. For this, there are two of the more popular methods— either they deal directly with a bank (also referred to as the “direct lender”) or they hire the help of a mortgage broker. So, which of these two options is better for you? Read on, friends.
While both banks and mortgage brokers share the same purpose, they differ in the manner by which they work towards their goal. One key difference between these two options lies in the source of their lending money. A mortgage broker Newcastle can help you navigate the home loan process and find the best fit for your needs.
For mortgages taken through banks, the lending money is sourced directly from the bank itself. This money is used to fund the entire process, including their loan offices, underwriters, funders, loan officers, and of course, the mortgage itself.
The loan officers that are affiliated with the bank also function as the sales force. Loan officers that work with banks are only allowed to sell you the properties and products that are offered by their employer. This affects buyers in such a way that their options are limited in terms of properties.
The prices that loan officers charge are usually not negotiable and they often offer the same loan at various prices. Some no-cost loans may be compensated with a higher rate, while loans that are more expensive are balanced out by lower rates.
On the other hand, brokers work with wholesale lenders who simply send a list of their properties, as well as the corresponding price of each of these properties. As a result, mortgage brokers have access to a wide selection of properties and this allows the prospective buyer to choose a property that corresponds with their preferred price point. However, it’s also important to note that the broker’s commission will usually come from the borrower. This is done by charging the buyer a higher rate. The excess, or the “rebate” from this higher rate is then used to pay for the broker’s commission.
So, which of these options is better for you?
Well, it really depends on your situation. If your assets, credit, and income are substantial, then transacting with a bank is going to save you a lot of time because you’re more than likely to get approved quickly.
In contrast, if you feel that you may encounter some obstacles during the course of your application, then hiring a mortgage broker is going to be the better option. This is because mortgage brokers are familiar with most lenders and they know which lenders are more flexible.
However, if you truly want the best results, it’s much wiser to get a loan quote from both a mortgage broker and a bank, and at that point you can simply compare and decide which option benefits you more.