Why working with a mortgage broker is different than going to your bank or credit union

When I first start working with my buyer clients, they often tell me that they are considering getting their loan through their bank or credit union. Most often, I will need to coach them into understanding the difference between the services offered by a mortgage broker and a bank.

First of all, a bank and/or credit union usually only has access to their funds, unlike a mortgage broker, who shops around to all private and public sources of loans, and generally offers you the best rate that they can find. Their fees for closing a loan (“closing costs”) tend to be significantly higher than mortgage brokers as well.

The other big difference in the two is that mortgage brokers typically have much better customer service. The few times that I have had clients use a bank over a mortgage broker, many problems come up. Appraisals don’t get ordered on time, the estimates that my clients received weren’t accurate, the loan officer pulled up too many credit reports (lowering my clients credit rating), and most often, the loan doesn’t close on time.

If you end up in a multiple offer situation and you have a pre-approval letter from your bank versus a mortgage broker, the listing agent is likely to make a note of this and it will be one of the considering factors when looking at all the offers.

When you shop around for different loans, ask for a Good Faith Estimate, and compare them side by side. You will want to make sure that everyone has a ball park amount of things like taxes and hazard insurance included, which will affect the amount of the monthly payment.

If you need a referral for an excellent loan officer, please check out my referrals page.

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