Banks vs.

mortgage brokers

If you’re buying a home, chances are you’ll need a mortgage, but did you know there are big differences between mortgage brokers and bank loan officers? While both mortgage brokers and banks can offer a variety of loans to fit your needs, there are distinct differences.

Loan officers at a bank, credit union or other lending institution are employees who work to sell and process mortgages and other loans originated by their employer. They often have a wide variety of loans types to draw from, but all loans originate from one lending institution. The loan officer takes your application and works to find a home loan that suits your needs. If your personal credit is approved, the officer moves forward to process the purchase.

Mortgage brokers are paid a fee to bring together lenders and borrowers. They usually work with dozens or even hundreds of lenders, not as employees, but as agents. They find and evaluate homebuyers, analyzing each person’s credit situation to determine which lender is the best fit for that person’s needs. The mortgage broker working to secure your loan is earning a fee for the transaction and the better deal they achieve for a lender, the more they are paid. Many of the mortgage companies that advertise online are mortgage brokers.

The biggest difference is in regulations. Banks are highly regulated institutions. Loans made at local banks are scrutinized by both state and federal regulators to make sure all efforts are made to analyze risk and align the right customer with a loan they need and can afford. Mortgage brokers are not regulated themselves, although some of the companies they secure the loans from may or may not be or not to the same extent as banks. Customers need to be wary of any offer that seems too good to be true.

In large part, the decision whether to choose a broker or banker depends on which atmosphere you feel more comfortable with. Using a local bank can sometimes be a plus. Their staff generally understands the specifics of local properties. With a local bank, customers can have more ready access for questions or concerns about the loan.

In the end, it really doesn’t matter much whether you use a broker or banker. You can get a good deal with either. The important thing is whether you get a good rate and pay fair closing costs. Make your choice of a lender based on the best loan terms you can find. Ask questions to make sure you understand all the costs and changes that can occur in the loan you choose. Above all work with someone who is reputable. A referral from a friend or real estate agent you trust can make all the difference in your mortgage experience.

This column is provided by American Marine Bank. Contact the Kingston branch of American Marine Bank at (360) 297-1711. Contact American Marine Bank mortgage lending at (800) 648-3194.