If you are on a mortgage hunt, you will find different kinds of options available for you in the market, such as mortgage brokers or mortgage banks. You need to understand the difference between the two. Their comparison will help you in making the right decision for your mortgage. Here is a detailed comparison between mortgage brokers and mortgage banks.
- Mortgage brokers
- Here are a few points about mortgage brokers:
- They are the middlemen.
A mortgage broker does not directly lend you money; they are the intermediaries who help you in finding the most suited lenders. They compare the rate of interest of various bankers and find the best option for their clients. They are professionals who can help you in making the entire mortgage process easy and efficient. Mortgage brokers also help you with the paperwork related to the mortgage.
They work on a commission basis.
The broker may or may not take fees from you; they take a commission from the lender. Their commission is some percentage of the loaned amount. The average fee for brokers is around 1% to 2.5% of the loan amount.
Brokers work non-stop
These brokers are generally self-employed, therefore, have flexible working hours. Some brokers may provide the facility of a 24/7 availability. That is highly beneficial for the clients.
They may or may not have a license.
There are many brokers in the market working without proper certification or license. It is essential to choose a mortgage broker who is certified, licensed, and reliable. Otherwise, you may be at a loss and enter into a long time-costly mortgage.
- Mortgage banks
- Here are a few points related to mortgage banks.
- They work directly
Mortgage banks are not middlemen; they are the lenders themselves. They provide their clients with loans at the fixed rate of interest in their banks. A banker is more likely to say no to a mortgage application if the clients are not financially fit to have one.
They do not work on percentage fees.
The employees of a bank get a fixed salary. This will never change by the rate of interest on the client’s loan. They have their client’s interests in their hearts, as they will earn no incentives for the work they do. It can go either way, a sincere banker will work for the client, but a non-serious one may ignore the client’s interest as he will be earning no profits.
They are licensed and secure.
A mortgage bank is legally secure; it fulfills all the legal requirements. The customers must have no concern about the interest rates being applied on their loans. The employees of a bank will never harm their clients as they have the bank policies to follow.
They are in it for life.
Once a connection is built with a bank, it is sure to last for a long time. The bank folks are career people who have a lot of time, energy, and resources invested in building their clients and promoting the bank where they’re working.
The above-stated points can help us in comparing the mortgage brokers and mortgage banks. Both of them have a few pros and cons; your decision must depend upon the kind of mortgage you want.