If you’re planning to purchase a home, chances are, you’ll need to get a mortgage. One of the first things you’ll need to consider is whether to go to a mortgage broker or a bank loan officer.
In this page, we’ll explore the differences between these two so you can make the right decision that matches your real estate goals.
Bank loan officer
A bank loan officer is an employee of a bank, credit union, or other lending institution. Their role is to sell and process mortgages and other types of loans offered by their employer. They typically work with a wide variety of loans, all of which originate from a single lending institution.
A loan officer will process your application and try to find a home loan that’s ideal for your requirements. Once your personal credit is approved, he or she will then take the steps needed to process your purchase.
A mortgage broker is a professional whose primary job is to match lenders with borrowers. Often, they work independently in small offices (sometimes even from their homes), connecting with multiple lenders who hire them as freelance agents, not employees. They act like scouts, searching for and evaluating home buyers, analyzing their credit status in order to determine the right lender according to each individual’s needs.
A broker submits a home buyer’s application to one or several lenders to sell it, and will work together with the lender chosen, right until the loan closes. Experienced mortgage brokers are able to find lenders for nearly any type of credit.
Mortgage brokers earn a fee for every loan they secure. The better the deal they facilitate for the lender, the higher they are paid.
Which one should I choose?
There’s no “right” decision, as every buyer has different needs, preferences, and budgets. To ensure you make the right one towards your goals however, remember to look into each option, and talk to at least two or three local banks, credit unions, and mortgage brokers.
As you gather more information, compare the type of loans you will be able to get out of every option. Ideally, you will be able to make comparisons between loans that require the same down payment, for the same amount and terms. This will help you create a detailed breakdown of the fees, rates, points, and closing costs, so you can get a clearer picture of which option is the best one for your needs.
Lastly, in case you’ve never checked your credit before, now is the right time to get a copy of your credit report. Print it out and take it with you when you talk to a broker or bank officer, so they can give you an idea of the types of loans you can get approved for.