As you hunt for a home loan, you will run across three different options of where to apply.
Your choices will be banks, mortgage banks or mortgage brokers.
You will naturally want to get “the best deal” on your loan, so having a little knowledge of the differences will help you.
While banks and mortgage banks are ‘direct lenders’ they normally sell only their own loan products.
Mortgage Brokers are middle-men and are compensated for getting you the best loan at the lowest rate.
In today’s real estate environment you will probably get the best deal on a home loan through a mortgage broker… for a number of reasons.
First of all, a Mortgage Broker can “shop” your loan amongst several different lenders to get you the best deal. And due to new Federal Regulations in the mortgage industry – regulated in 2014 – a Broker can now make you a home loan and charge - NO FEES!
Secondly, a mortgage broker is typically a small locally-owned company with small operating expenses. Only two people will make money on your loan, the Loan Officer and the Owner.
While banks and mortgage banks are large operations with layers of management where every layer makes a little bit on your loan. From the Loan Officer to the Manager to the District Manager, the Assistant Vice President, the Vice President, the Senior Vice President…and on and on!