Should You Go With A Mortgage Broker Or Bank?

By: Matt Borkowski

I had a guy call me yesterday and the first thing he asked me was, “Are you a broker or a direct lender?”. Well, this isn’t my first rodeo, and I knew immediately where he was going with this. However, I asked him why he would ask me such a question just to hear his reply. He said a broker took him to the cleaners a while back, and he only wanted to deal with a direct lender.

The first thing to know about mortgage lending, stock brokerage, real estate sales people, insurance etc… is unscrupulous people are in every area of every business. It’s not about a broker or direct lender. It’s about the people.

The second thing to know is brokers are essentially agent for direct lenders. The only real difference between taking application with a broker and a direct lender is the loan officer for the direct lender actually works for the direct lender.

Many people have the belief they will get a better rate or closing costs by going direct to the source of money. Not the case.

You will find the price by going direct will be no better than going through a broker. Lenders use brokers as a sales force to sell their loans. They give the broker a wholesale price for the loan and the broker resells at a market rate.

How you may benefit by moving with a broker is in the event you have an unusual financial situation. Brokers have the ability to shop your loan to many different lenders, finding the best deal for you. Your direct lenders don’t have this luxury. It’s their loan or none at all.

Lastly, you may actually get a more experienced loan officer if you go with a broker. Your best and brightest loan officers are human and want to make the most money possible. They want to be straight commission and have many options to offer their potential customers. Because brokers offer this and many direct lenders do not, your more experienced loan officers will generally be found working for a mortgage broker.