Mortgage Loan Banking

You are going to buy a house. You know that you will need a loan. There are so many choices to look at. Do you look into mortgage brokers? Do you go directly to your bank? Which is the best option? What should you do?

Broker or bank?

You may be deciding between your bank, and a mortgage broker. There are good things and bad things to say about both of them.

Using a broker

A mortgage broker will do just about all of the work for you. You can go to a broker and give him the necessary information. He or she will use their knowledge and experience to get you a loan. You have to know very little about the loan process. If your credit is bad, your broker will try to find you loans on that account. Many times a mortgage broker can find loans for people when no other lender seems interested. There is no limit to the program or lending institution. You can do business with all of them through the broker.

There are instances where a broker may get you a lower interest rate. Moreover, that rate may be with your own bank. Your bank will offer you retail interest rates. A broker may know of special deals with wholesale interest rates.

A mortgage broker may be on a more personal level. Some banks may seem a bit stuffy. You may feel like they are doing you a big favor, to give you loan. In reality, that is how they stay in business. A broker may tell you to call him or her any time. It may be more like person to person as opposed to person to institution.

Brokers might be able to get you a no down payment deal. There also might be very low down payment deals and situations. Banks will not do that. They have set amounts for their down payments. If you do not have enough, you have to look elsewhere.

Brokers have to tell you the yield spread premium. Banks are under no such obligation. The YSP is very important to know and understand. Brokers and banks make money this way. The lender will pay them a commission for giving you a loan at a higher interest rate. If the broker sells you a retail interest rate loan, he will get a percentage bonus. Often times they will use part of this to help you pay your closing costs. They do not have to. That is why you should always ask about YSP with all lenders.

Using a bank

If you have been a good customer with your bank you may qualify for special deals. They will already know your personal situation. It is possible that a mortgage broker will be shady or dishonest. Banks are more out in the open and subject to scrutiny. You may be able to get a better rate with your bank. This is especially true if your credit is good. You can have your mortgage payment automatically taken out with a bank also.

Summary

Mortgage brokers offer many good services. Banks do too. Weigh the differences. Depending on your situation, they all can be good choices.