What You Need To Know About Mortgage Brokers And Loan Officers
Unless you happen to be paying cash for your new home, you'll need a mortgage loan in order to finance it instead. There are lots of ways to go when getting a mortgage, but two of the most common is to either use a bank loan officer or a mortgage broker, and let's discuss the pros and cons of each.
A bank loan officer is essentially an employee for that particular bank. Their job is to review applications for loans that are made with the bank, and only except the ones that fall within the bank's guidelines for approval. The advantages of using a bank loan officer when securing a mortgage is that if you tend to do a lot of your financial business with the bank, and they know you well, you may find you can get very good terms and easy approval to boot.
A mortgage broker on the other hand is an independent agent that usually represents several lending institutions at once. They are not employee of any of these companies, but they are representatives of them instead. Their job is to find you the best mortgage among the various companies that they represent, and they will be paid a fee for bringing the lending institution and the customer together.
A mortgage broker may not be nearly as familiar with your overall financial situation as your local bank is, and so you may have to provide them with quite a bit more paperwork and documentation than your bank would require, assuming that you bank has a familiar relationship with you.
A mortgage broker will be able to access your credit history just once and then send the details of your loan application to more than one company at a time and let the lenders compete in order to get the best terms and rates possible. This can be an advantage on your credit history report, as having your credit report accessed too often in a short period of time can actually harm your credit score overall.
The real advantage to using a mortgage broker though is found when your bank or credit union decides not to extend you a mortgage loan for some reason. Most often you will be able to still get the mortgage that you want by going through a mortgage broker instead, although you may have to pay a higher interest rate and fees in order to do so.
Keep in mind that any mortgage broker will be paid commission based on the amounts of profit that the lending institution will make, and so be careful of being charged in interest rate that is too high and unnecessary fees in the mortgage contract.
As you can see, very often your most favorable terms and rates can be found by going through your own bank or credit union. However, if that is not an alternative, a mortgage broker can be a very effective solution for getting mortgage approval instead.
Steadman Issenburg writes on many consumer related topics including real estate. You can find mortgage rate calculators and compare mortage interest rates and more by visiting our Real Estate website.
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