Whether it’s better to work with a mortgage broker or get a home loan directly from a bank depends on your financial situation and your preferences. For example, if you might have trouble qualifying for a mortgage or you place a high value on convenience, a mortgage broker may be worthwhile for you. On the other hand, working directly with a bank might make more sense if you’re comfortable crunching some numbers and you want to feel more in control of the homebuying process.
Working with a vs. a bank is like working with a travel agent vs. researching and booking a trip on your own. It might be less hassle on your end to work with a professional, but there may be tradeoffs for that convenience.
are one type of direct lender — when you’re getting a mortgage, the bank is directly lending you the money to buy a home. Other types of direct lenders include online lenders specializing in mortgages, specialty lenders that cater to certain types of home buyers (like companies that focus on military service members) and credit unions.
When you shop for a home loan with a bank, you’re doing the legwork of figuring out whether that bank is right for you. So chances are, you’ll find yourself setting up a spreadsheet or at least making a list to keep track of rates, fees and other considerations.
A mortgage broker serves as an intermediary between you and direct lenders, which include banks. After discussing your needs, mortgage brokers take care of the rest. They reach out to their contacts at direct lenders and come back to you with options that fit your criteria. The broker then works with you to figure out which loan best suits your circumstances and continues to facilitate the transaction through the closing.
There are several advantages to using a mortgage broker versus a bank. Doing the research and on your own can match some of the benefits of working with a broker, but a mortgage broker may have access to more resources.
Working with a mortgage broker isn’t for everyone. If you feel comfortable talking to loan officers and want to be in the driver’s seat, you may work directly with a bank.
This post was originally published on Nerd Wallet
