88% of home buyers take out a mortgage to buy a home. Today, homebuyers have many mortgage options. You can choose a payback period that best suits your finances.
Mortgage rates are also relatively low — at 4%. So this is a great time to take out a mortgage.
However, these options can also bring confusion. Where to get a mortgage is another dilemma that homebuyers face. The two common options are getting a mortgage from a lender or a broker.
Which is the best option? We compare getting a mortgage from a lender or an independent mortgage broker.
Lender
As a buyer, you may have considered going directly to the mortgage lender.
You have many options when getting a mortgage directly from a lender. You can choose a bank or credit union.
If they already have an account with a bank or financial institution, a homebuyer usually goes with that company. But there are also private and online mortgage brokers that offer competitive rates.
Many homebuyers go directly with a lender for the convenience. However, it’s still best that you shop around. Every lender offers different rates and it’s best you compare your different options.
Pros
One of the biggest benefits of getting a mortgage directly through a lender is saving on fees. But this doesn’t mean you’ll get the best mortgage.
If you’re signing up for a mortgage through your bank or credit union, they already have your account information and have a firm knowledge of your financial history.
If you have any questions, you can speak to the lender directly.
Cons
The biggest drawback of signing up directly with the lender is the comparison difficulties.
If you get a loan through a mortgage broker, they can identify the best rates and the most flexible requirements. You may not be getting the best mortgage through a lender, even if you’re signing up with your bank.
Independent Mortgage Broker
You don’t get a mortgage directly through a broker.
Instead, a broker is the middle person that connects you to the best mortgage rates. They also take a look at your financial history and take a look at the different mortgage options you have.
Most brokers will collect rates from different lenders and will help you choose the best option.
They will also take your finances into consideration as well as the kind of property you’re buying; for example, they can find different mortgages if you’re buying a condo versus a home for your family.
While you should do your own research, a broker can provide advice and recommendations. They have incredible mortgage knowledge and can help educate you on the whole process.
Another benefit of using a broker is many lenders work specifically with brokers. You’ll find incredible rates that you wouldn’t find otherwise.
Some brokers charge a fee based on the mortgage amount. If a lender works directly with a broker, the lender may pay that fee.
Pros
The biggest benefit of working with a broker is having many mortgage options.
If you’re applying to lenders yourself, you may feel overwhelmed and not know what exactly you’re looking for. When you hire a broker, they reach out to lenders in their network as well as finding other mortgages with the best rates.
You’ll also benefit the most from hiring a broker if you don’t make the most money or if you have bad credit. If you’re struggling to find a decent mortgage, a broker will know the different ways to find the best mortgage for your situation.
One of the advantages of working with a lender is direct communication. However, this doesn’t mean a lender is easy to get in touch with — especially if you take a mortgage from a major bank.
Most brokers are independent and are generally easy to reach out to. They’re also happy to answer any questions, educate you, and offer advice and recommendations.
In addition, you’ll have an easier time scheduling meetings and appointments.
Cons
The biggest disadvantage of working with a broker is paying their fees. But broker fees are flexible. Some don’t offer high fees. If you opt for a lender that works with the broker, the lender may even cover the fee.
While a broker is the most knowledgeable in this field, you still won’t get the best deal if you don’t do research and understand what mortgage is best for your financial situation.
A common mistake homebuyers make is only trusting the broker’s knowledge and experience, failing to conduct their own research.
In case there are any delays with the closing, you’ll have to go through the middle person and not the lender directly. This could extend the delay even further.
When to Seek Help From Both
You don’t have to choose between a lender or a broker. If you’re still weighing out the pros and cons of both, you can contact a lender or a broker and ask questions.
You can also apply to different lenders first. If you’re still not satisfied with their rates, you can contact a broker and ask how they can help you.
When to Contact a Broker
Does a broker seem like the better option? Every home buyer will benefit from a broker in some way.
But you’ll experience the most benefits if you have no luck finding a good mortgage, you don’t want to directly deal with lenders, or you have a bad credit score.
Seek Help From a Broker in North and South Carolina
Are you looking to get a mortgage for a home?
You’re probably wondering if you should get your mortgage from a lender or a broker. While there are benefits from going with a direct lender, most home buyers will benefit from working with an independent mortgage broker.
If you live in North or South Carolina, you’re in luck. Our brokers are reliable and will work with you to ensure you get the best mortgage rates. Don’t believe us? Take a look at our amazing reviews.