Mortgage Brokers & Mortgage Bankers

If you’re getting a mortgage, a mortgage broker or mortgage banker is a good option to consider. There are very few instances where a mortgage broker or mortgage banker cannot save you money — and when we’re talking mortgages, saving money is key. There are several great reasons to use a mortgage broker or mortgage banker.

One Option or Multiple Options – Which Would You Rather Have?

When you go to your bank and apply for a mortgage, your bank deals with their current rates and policies. That means that even if you have friends at the bank and are dealing with good people, the best deal you can possibly get is the best deal that bank can offer.

Mortgage brokers or mortgage bankers, on the other hand, act as intermediaries between you and banks. They are not in the employ of any one bank and have immediate access to a wide variety of information. So while you would go to your bank and find the best deal that bank can offer, a mortgage broker sees the best deals from dozens of banks at once.

Contrary to what some believe, you do not have to take your mortgage through the institution where you do the majority of your banking, and there is no real advantage to doing so. If another mortgage broker or mortgage banker will give you a lower interest rate then you should go with them, your brand loyalty could cost you upwards of tens of thousands of dollars over the term of your mortgage if you don’t.

Expertise & Experience

Unlike a loan officer at a bank, who handles a wide variety of borrowing, mortgage brokers or mortgage bankers deal exclusively with mortgages and have a vast amount of information at the ready. They are much better equipped to advise you on your mortgage than a bank.

Mortgage brokers and mortgage bankers are typically more experienced due to the fact they only work on mortgages where banks use loan officer positions as a “training ground” for bankers to move onto other positions at the bank. Would you rather have a “rookie” or a “seasoned-pro” handle your largest financial transaction?

Motivation for an On-Time Closing

Loan officers at a bank are paid a salary no matter whether the loan closes on-time or not. On the other hand, mortgage brokers and mortgage bankers are only paid if and when the loan closes. Thus, mortgage brokers or mortgage bankers are more highly-motivated to close your loan on time. Since they are paid per loan they are incentivized to make sure your loan process goes as quickly as possible.

Wholesale vs Retail Pricing

Banks have lots of overhead to manage at each of their branches such as rent, utilities, payroll, benefits, insurance, etc. these items have to be covered by the revenues earned by the bank including loan revenue. Thus, on each loan there has to be enough revenue “built-in” to cover the overhead and loan officer salaries. They have to offer “retail pricing” to cover the expenses of the retail locations.

When banks contract with mortgage brokers or mortgage bankers the banks are not responsible for any of the above overhead, thus they can pass on that savings to the mortgage broker or mortgage banker through “wholesale pricing”. This “wholesale pricing” allows more mortgage brokers or mortgage bankers to pass the savings on to the borrower in the form of a better interest rate on their mortgage!

Bottom Line

In most every instance borrowers not only get better rates on mortgages when they use a mortgage broker or mortgage banker, but they get a higher level of service along with a more experienced mortgage professional.

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