When shopping for a home mortgage or looking to refinance you have a lot of options. You could go through a local credit union, select a large national bank, choose a brick and mortar operation or opt for a fully online experience. The number of options can be great because it gives you choices but the market is crowded and can be confusing.
Despite the enormous number of options the decision often comes down to the choice between a mortgage broker or a bank and there are definite differences. Here’s a short video describing some of those differences.
I like the comparison of a broker to a personal shopper. If you go through a bank you might get a good rate and/or pay “low” fees but you are limited to the loan programs that bank offers. Don’t expect a bank to shop your loan out to other banks. That’s not how it works.
But that’s exactly what a broker does. A broker works with different lenders, taking advantage of a wide variety of loan programs to find the best option for you. A broker isn’t tied to any one lender. This is important because a broker has access to traditional as well as non-traditional lenders and can react to changing markets a lot quicker than a bank can.
There are a number of advantages to working with a broker instead of a bank. Those advantages include:
- Single Point of Contact (with backup)
- Customized experience
- Clearer process
- Lower Cost
When I think of the customer experience the following visual comes to mind.
If you are working with a broker (say Aaron Lending, LLC for example) you will be working with the broker or the specific loan officer (Aaron or Jay for example). The broker is there from the initial discussion through the loan signing and closing. They’ll know and understand your situation and your needs. They’ll collect all the necessary information, explain the process, and provide disclosures. If you have any questions you’ll call the broker and they’ll provide the answers.
With a broker, the process will be tailored to your needs and expectations. For example, a Broker can mix 1st and 2nd mortgage from two different lenders, provide odd term loans like 18-year, 26- years to coincide with a retirement date or offer specialty programs like a reverse mortgage or 1% down loan programs.
Because the broker is involved in every step of the transaction they will be able to explain what is needed at every stage, why each piece of information is important and how it can affect the loan closing. With just a couple people touching your loan paperwork, they are more knowledgeable, faster at pushing the loan through to the close and cheaper than large organizations.
The same cannot be said of banks where dozens of different individuals may be involved in your loan at any given stage of the process. Call a bank and you will likely get a recording. Wade through the “options that have recently changed” or enter the extension you are trying to reach, if you have an extension, and you might eventually be put in contact with someone who probably doesn’t have anything to do with your loan.
That can be a frustrating experience that creates unnecessary tension and anxiety during the already stressful process of buying a house, packing, and arranging a move. A broker, on the other hand, is often your first and last point of contact is familiar with the entire process and is responsive to you.
For more information contact Aaron Walker or Jay Rapson at Aaron Lending, LLC.