Mortgage Broker vs. Bank Specialist
At some point during the first conversation I have with every Buyer I ask if they are pre-approved with a Mortgage Broker. I consider this absolutely crucial for reasons I go into in the link above. I also tend to steer clients towards Mortgage Brokers instead of banks simply because I believe that as a rule they get better options and rates as well as better overall service from Mortgage Brokers.
There are actually a number of differences which you may not be aware of.
- A Mortgage Broker works for you, the client, whereas Bank Specialists are employed by the financial institution. The Mortgage Broker is on a commission (like us Realtors) and only gets paid for putting the deal together and hopefully satisfying that client enough to keep their future business and perhaps a referral or two as well. The Banker is on a salary and although they may have a quota they have to satisfy in order to stay employed, they will still get paid every month with or without your particular deal. That’s a lot of motivation to keep your business on the Mortgage Broker’s part to get your deal done, not as much on the bank employee’s part.
- Another benefit of using a Mortgage Broker is that they have the ability to offer you mortgage products from a variety of financial institutions. Because a Bank Specialists works for the bank that means that they can usually only offer you their institution’s approved products/packages. With the Mortgage Broker, instead of having options from one particular bank available to you, it gives you access to that same bank’s rates package (as a rule) and the rates from every other bank. Also, there is a long list of other lenders that they have access to that don’t have a physical place for you to visit in the area. The result is many more options to choose from and the Mortgage Broker helps you figure out the best one for you. This is particularly useful if you have something about your situation that makes financing a little harder to qualify for.
- Mortgage Brokers are typically paid the same amount no matter what rate is offered to the client. Bank specialists’ rate of pay is generally reduced in direct relation to the amount they discount your rate from the bank’s posted rate.
- Because Mortgage Brokers don’t work for a specific lender, you’re assured that you will be given impartial advice. A bank specialist has a limited number of their own institution’s products and while it may not be the best mortgage product out there, they will do their best to sell you their institutions mortgage product because they don’t want you going somewhere else.
- Mortgage Brokers use their knowledge and experience to negotiate the best possible rate and product for you from a number of lenders. When you see a bank specialist, that mortgage negotiating is typically left up to you.