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Should You Use a Mortgage Broker or a Bank?

You’re on the verge of buying an apartment in New York City, which leads to a series of decisions, such as this one.

Should you use a bank or a mortgage broker to get a mortgage loan?

The answer? It depends! Here’s why.

Banks are better because...

  • The bank is lending the money, so the bank is making the decisions. Mistakes in the application process may be cleared up faster and small favors can be more easily gained by using a bank.
  • If you have an existing relationship with a bank, you could qualify much easier since the bank already has access to your financial information and has a relationship with you.
  • Likewise, longstanding relationships between real estate brokers and banks can impact the efficiency of the preapproval, mortgage application and approval process. Relationships matter and banks may offer these long-standing customers more favorable terms on a mortgage.
  • Many loan products, especially special products such as jumbo loans that exceed certain loan limits, are available only through the banks that hold these loans.

Mortgage brokers are better because...

  • They shop around to all kinds of lenders, including many banks. While the number of mortgage brokers has severely shrunk since 2008, those left standing can be knowledgeable and useful for clients who don’t have the time to look for the best rates and terms.
  • Loan products are not as plentiful as they were before 2008, however, mortgage brokers can in some situations offer more variety or options than a bank, since brokers are not tied to one specific lender or bank.
  • If you are turned down by your local bank you can contact three or four different mortgage brokers and explore all of your options.

There are advantages to both bankers and brokers. It’s wise to approach two or three different banks and mortgage brokers before you make a decision on which mortgage terms and rates you will accept.

In the rush to secure financing, it’s easy to gloss over the variety of options available for securing a mortgage, or not look at differences in fees and services associated with banks and brokers.

Find a lender online

While visiting a brick-and-mortar lending institution is the tradition, another popular option is to find a lender online. Zillow Mortgages allows borrowers to shop for mortgage rates anonymously from among a variety of residential mortgage lenders. Rates and fees are competitive. Just enter in a few simple pieces of information, and you will see mortgage rates anonymously. There is no obligation to use Zillow Mortgages.

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