Choosing Between Mortgage Bankers and Brokers

There are two main categories of mortgage lenders: bankers and brokers. A mortgage banker is a direct lender that represents the bank underwriting your mortgage loan. If you decide to work with a direct lender, it is your responsibility to shop around and find the best mortgage rates and terms available. The broker is an intermediary not tied to any particular mortgage institution. Instead, they have access to mortgages from a wide range of institutions, and they will usually do the legwork for you in terms of shopping around for the mortgage that best suits your needs.

The main advantage of choosing a mortgage banker is that they offer a reliable service, with little chance of coming into contact with a predatory lender. In addition, if you choose to get a mortgage from the bank you already do business with you may be entitled to a more favorable interest rate. The disadvantage is that you get very little choice, as most mortgage bankers offer very similar rates, terms and conditions.

A mortgage broker, on the other hand, provides you with plenty of choices. As an intermediary, a broker has access to wholesale lenders that offer a wide variety of different mortgages types. If you need a sub-prime mortgage or another non-conventional type of mortgage, a broker is your best bet for obtaining one. For first-time buyers, a broker can also help make the process of getting a mortgage much easier, as they are able to offer advice concerning mortgage analysis, and the best ways of presenting loan applications.

Brokers usually offer loans from wholesale mortgage lenders, and these loans have reduced rates in comparison to those offered by mortgage bankers. Once the broker has added their personal fee, the total cost of the mortgage is usually not much more than the cost of going to the mortgage banker.
The biggest potential problem in working with a broker is that since a license isn’t required to practice the profession in many states, it can be difficult to ensure that the broker you are dealing with is reputable.

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