When it comes to securing the perfect mortgage, many homebuyers can feel challenged at an important intersection. Should they choose a more traditional route of working with a bank or direct lender, or seek the personal knowledge and portfolio of investors by working with a mortgage broker? Whether you're in Orange County, CA or Phoenix, AZ, it's best to understand the benefits of working with mortgage brokers vs. banks. Although both options have different strengths, mortgage brokers tend to have specific advantages compared to working with a local bank or direct lender... lets look at what those are.
Customized Guidance From an Expert:
The first benefit of working with a mortgage broker is the one-on-one guidance that a broker will provide throughout the entire home loan process. Unlike banks and direct lenders that work within strict underwriting and lending guidelines (their own guidelines including overlays), mortgage brokers work with many different investors and lenders. This gives the broker options to personalize solutions to meet the unique needs and goals of each and every borrower. This one-on-one approach with a mortgage broker (who holds a fiduciary duty to you) ensures that each and every borrower receives the best loan, rate and terms, and odds of fitting within the mortgage guidelines to qualify. They will be able to guide you from that start to ensure that you've been placed with the best investor.
A Variety of Lenders and Investors:
Mortgage brokers act as liaisons between mortgage borrowers and investors/lenders, which gives homebuyers access to a huge network of lending institutions. This wide array of products and investors enables brokers to provide you with a wide range of loan products, interest rates, and terms. This will ensure. that borrowers have the opportunity to choose a loan option that will meet or surpass their specific goals and requests.
There are quite a few misconceptions when people think of working with a big bank, direct lender or specific mortgage company. They think that working with one of those entities may result in cost savings for homebuyers. The opposite is usually true. Mortgage brokers have well-built relationships with tens or hundreds of investors and lenders, which gives them the power to find and negotiate the most favorable interest rates and terms for you. They can even sometimes help to lower the total closing costs for their clients. These benefits and savings can add up to a pretty huge benefit over the life of the loan.
Efficiency & Less Time:
Hunting for a mortgage expert and getting to the finish line can be a very time-consuming process. Mortgage brokers typically streamline the whole process by collecting the paperwork, being there with to overlook communication with lenders, and ensuring that all necessary documents to meet the underwriting guidelines are submitted right away. This level of one-on-one attention from a professional mortgage broker not only makes the initial loan approval process more efficient but also take away a load of stress tied in with the other tasks involved while getting a mortgage.
Most mortgage brokers are truly specialists when it comes to lending, staying on top of mortgage rates, bond market and MBS trends, any shifts underwriting guidelines or requirements, and newer mortgage options/products. They are typically independent, so they will have more drive to get to know the updates and changes in the industry. By doing this, they will be able to provide major insights and advice to borrowers, so that they save the clients time and money. I've heard many horror stories of clients working with big banks and lenders and after 60-120 days in process, end up denied due to something that could have been caught up-front. Choose a true expert over a big name!
Flexibility and Options:
Big banks usually lender their own money so there's one rate and a few loan options or products. Many also have restrictions on top of general guidelines, which can make it harder to borrower money or get a home loan. Because mortgage brokers can choose from a bunch of lenders to place you with, they have much more flexibility. If one lender requires you to have something you don't, they'll look for another that doesn't require that. Would you rather have one main dish for dinner or twenty to choose from?
The Benefits Of Working With Mortgage Brokers vs. Banks: The Conclusion
Banks and mortgage brokers both serve a good purpose in the home financing process. They both have benefits and they both can get you a mortgage. A mortgage broker just has more options, rates and terms to choose from, and can place you with a lender that has underwriting guidelines that fit your needs. They are personalized experts who study market rates, product offerings, lender guidelines, and these can all impact you positively during the homebuying journey. Whether you're a first time home-buyer, huge investor, or just wanting to refinance - I'd highly recommend getting a second opinion from a reputable mortgage broker. Reach out to Ross Varahrami to see what he has for you - zero pressure and he'll be happy to help you.