Getting prequalified for a mortgage with both a bank and a mortgage broker can help you understand what your options are and compare offers. While an offer may change once you submit an actual loan application, prequalification will give you a good idea of the rates and terms you can expect. This could help you immediately see if your bank or a mortgage broker is likely to offer you the best rate and terms. That said, your experience can really vary depending on who you choose to work with.
Whether you choose to work with a mortgage broker or bank to get a loan for your home, you should be able to negotiate a favorable interest rate and closing costs. When deciding between a mortgage broker or a bank, focus on what's most important to you. Mortgage brokers save borrowers time and can compare their loans with several lenders. Whereas a bank may offer lower ratio prices and closing costs to reward you for being a customer.
Mortgage brokers are an important part of the mortgage business and account for more than 10 percent of all mortgage loans, more or less. Another specialty mortgage company, Caliber Home Loans, can make jumbo loans with as little as a 5% down payment. In fact, FICO has adjusted its algorithm for this purpose and ignores mortgage inquiries made 30 days prior to qualification. Because they offer mortgage products from several lenders, they can find loan products that fit their needs.
Mortgage brokers once had an uncertain reputation, so it's no surprise that many people are still hesitant to use them. Specialty lenders that only make mortgage loans such as Rocket Mortgage or Better Mortgage are usually grouped under the category of banks. Yes, you can get another mortgage, but you'll need to show that you plan to occupy the new home, assuming you want to get an owner-occupied loan. I have worked for banks for 15 years and I can say with quite confidence that mortgage brokers are always the best option.
People who are less qualified buyers or who are buying less traditional properties will find it easier to find loans that can be approved through a mortgage broker than through individual direct lenders with generally stricter approval criteria. Mortgage brokers don't anticipate loans, but they do offer a one-stop shop with access to multiple lenders, while a direct lender is a single entity that eliminates intermediaries. Even a small difference in your interest rate can cost you tens of thousands of dollars over the life of a 30-year mortgage. A direct lender is a financial institution or private entity that actually provides the loan for a mortgage.
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