Finding a mortgage may be intimidating and finding the right place to get a mortgage may be a difficult decision. The first thought for someone looking to get a mortgage is to go to their bank because that is where their money is. The existing relationship is what draws most people to a bank but a bank is limited in the mortgage options they can provide. The other option is to use a mortgage broker who is an independent source that will negotiate with various mortgage lenders for you. The mortgage broker is not tied to one bank or lender and will have access to many different banks and lenders offering more options and choice.
The bank mortgage specialist will have knowledge of the specific banks products and programs, but will lack knowledge of the other products in the market that may be a better fit for you (the customer). The bank will know what type of products they can offer but have little flexibility to expand the offerings beyond what the bank is able to offer. They also may not have the best terms and conditions so you may end up paying more for your mortgage than with another lender. The relationship with the bank may be the only thing separating your rate and conditions than someone walking into the bank for the first time.
A mortgage broker has knowledge about mortgages from various lending sources and will have know the full range of mortgage options for the various lenders. A mortgage broker will take your mortgage to the best lending option and negotiate the terms for you using their relationships with the various lenders. The broker will have the knowledge and ability to put the customer in the best mortgage product at the best lender. The knowledge a broker has stretches beyond just products as they have extensive knowledge on the mortgage process. Providing education throughout the process will provide you with a smooth mortgage experience and eliminate any surprises along the way.
Mortgage brokers are to spot any possible challenges or red flags in your financial history and take steps to deal with them proactively. This would allow you to correct these challenges before the mortgage application comes to a halt at the most inconvenient time. A broker will eliminate the halt and develop a plan for your financial situation.
You as the customer have a choice as to where you want to go to get a mortgage. Knowing what the best option for you will help you get the best results for your mortgage.
Source: Dan Caplinger: Motley Fool