Congratulations! You’ve decided to purchase a new home. As you look into financing, you may wonder if all mortgage companies are the same. The simple answer is no. Choosing a financial provider isn’t as simple as calling the first company that comes up in your Google search.
Bank Mortgages
A bank mortgage is a traditional financial institution for home loans. These locations are excellent for buyers with great credit that already have a relationship with the bank. While you will get personalized service at your local bank, it’s essential to understand the loan officer doesn’t focus solely on mortgage lending. Banks offer many services, including savings and checking accounts and other loan types, such as auto, personal, and business.
Unlike other financial institutions, banks often service their own loans rather than selling the mortgage to another company. Many borrowers enjoy this perk of using their local bank for their mortgage needs. It means they’re more likely to keep monthly payments under the same account number and payment location.
Additionally, it offers a personal approach that people often find comforting. These locations are often more challenging to secure a loan because of strict requirements. On a more positive note, you may get more favorable terms with a bank mortgage.
Depending on the institution’s size, it may offer special lending programs designed to meet specific buyers—for example, loans for first-time buyers, self-employed borrowers, and investors.
Mortgage Lenders
A mortgage lender is similar to a bank. They finance their own loans and can take care of the entire process in one location. Completing all the steps with one institution can shorten the purchasing process significantly.
How they differ is important. The mortgage company focuses solely on home and property loans. These businesses are financed by banks and also follow strong guidelines for approvals. Skip the mortgage lender if you want your service with one institution. These companies don’t service their own loans. Instead, they sell them to servicing companies and lenders in a reasonably quick process.
Home Loan Brokers
A mortgage broker doesn’t finance their own loans. Instead, these companies do the leg work for you by finding the best deals to fit your individual needs. Many homebuyers choose home loan brokers first to avoid limited options offered by banks and similar institutions.
Although they don’t provide direct financing, it’s easier to secure a loan with an intermediary that has relationships with multiple lenders. This option is also helpful when your situation doesn’t fit into traditional financial institutions’ conventional programs. Buyers with low or limited credit have a better chance of getting a loan through a home mortgage broker. They work with lenders that take higher risk investments in return for fees and higher interest rates. If you don’t have a sizeable down payment of 10 to 20%, a mortgage broker may be able to find financial assistance, such as help for first-time homebuyers.
Additionally, the home loan broker is your best option when your circumstances change for the better. They can help you get a lower rate when you renew your loan, which in return can save you money.
Which Option Should You Pick?
After reviewing the differences, you may wonder which is best for your needs. The answer depends on your financial situation. Buyers with excellent credit, a full down payment, and a good relationship with their bank can speak with a loan specialist at their local branch. They may find the perfect home loan that includes everything they’re looking for and more.
Consumers who don’t have a relationship with one bank, but have everything else, including the credit rating and a 20% or more down payment, can go with either type.
However, if you’re in the last category and have some issues that may make securing a loan more difficult, consider a mortgage broker. These companies focus solely on helping buyers like yourself get approved and into their dream home. Some institutions may make you feel like you don’t have a chance because of low credit or self-employment income. Don’t let them decide for you.
Do you have more questions about how a mortgage broker can help you secure your dream home? Contact Altrua Financial today for the answers you need to start on the path to homeownership.