If you’re shopping for a mortgage loan, either for a purchase or a refinance, you may encounter both bankers and brokers who specialize in home loans. So what’s the difference?
Although both types of lending professionals have something to offer a would-be home buyer — and both can potentially help you get a mortgage — knowing the difference can save you time, and often money.
What Is a Mortgage Loan Banker?
A mortgage banker is typically an employee of a bank or credit union that lends its own money for its customers to purchase their home.
In this scenario, the bank or credit union lends the money to you directly, rather than working through a third-party broker.
One advantage to working with a mortgage banker is that your financing costs may be lower. However, you may end up with a higher interest rate, offsetting any potential savings. Banks traditionally have a higher standard for qualification, so you may need exceptional credit and income limits to qualify. Finally, the process of obtaining a mortgage loan from a bank typically takes longer than from other sources.
What Is a Mortgage Loan Broker?
A mortgage loan broker does not work for a single lending institution. Instead, they work for a company that represents multiple lenders — often including many of the same banks you could work with directly.
The primary disadvantage to working with the broker is that the broker’s fee is included in your loan amount. However, because brokers help lenders get new business, the lenders may cover some portion of the broker’s fee.
The primary advantage to working with a mortgage broker is that you will have exponentially more home loan programs to choose from, including options for buyers who have credit challenges or who have not yet established strong credit.
The process can often move faster with a broker, as their team can work quickly to package your loan application as they know the lender wants to see it.
When Shopping for a Mortgage, Should You Talk to a Banker or Broker?
If you have exceptional credit and a strong relationship with your bank, you can try talking to a mortgage banker about a home loan. However, you may also want to talk to a mortgage broker who represents multiple lenders. When you compare the actual cost of your home loan, you may find that a broker will provide a better level of responsiveness and service at a comparable cost. You will have more options to choose from too, especially if you have less-than-perfect credit.
In Orem, Utah, Intercap Lending represents many different mortgage lenders and offers a wide variety of options for you to choose from. Contact us today to learn how our friendly, experienced professionals can streamline the mortgage loan process for you.