January 30, 2013

Making the choice between mortgage brokers and mortgage banks

Most of the real estate buyers face problems deciding on whether to resort to the mortgage brokers or the mortgage banks. It’s very obvious that they are on the lookout for the best deal that they can get, but choosing the right way often takes the better of them in the same way as mortgage refinancing does. It’s important to understand the difference between the mortgage brokers and mortgage banks before you choose any one of them for the fulfillment of your purpose.

Who are mortgage brokers?
If you've heard of freelancing agents, you probably have an idea of what mortgage brokers basically do. They act as a link between the lenders and borrowers. They are responsible for finding the lenders some good borrowers and earn commission from the lenders in exchange. Being freelancing agents, mortgage brokers are pretty much independent. They work alone. They have several sources of contacts, which makes it easier for them to carry on with their jobs as brokers. Mortgage brokers follow a particular routine as they work on finding data for borrowers. It’s important that you let them know your plans well so that they can get you the approval as well as make sure you have the mortgage that suits your situation best.
Opinions vary with people with many preferring the services of mortgage brokers. They believe that going to banks isn't going to bring mortgages as good as the ones they can get through mortgage brokers. Mortgage brokers are spoken highly of by people as many are known to have made the approval of applications possible despite bad and fallen credit histories.

Pros and cons of Mortgage Brokers
It’s better to know the pros and cons of mortgage brokers before you decide on appointing any one of them for your purposes.
Pros
·   Your choice of time – With mortgage brokers, you get the flexibility of setting up appointments at your own time.
·   Competitive rates – The rates are very competitive in the sense that they can save a lot of your hard-earned bucks.
·   Find lenders when you need them – Mortgage brokers are known to find lenders for you even when your credit history has a lot to speak against you.
·   Carry out negotiations – Mortgage brokers take up the negotiation job with much pleasure to make sure the mortgage payments are never too heavy.
Cons
·   Offshore and small lenders – Lenders offering good rates are either based outside the country or small enough.
·   Lack of responsibility – It is really a matter of concern that mortgage brokers don’t care if or not people can handle the mortgages that they are borrowing as higher mortgages would mean better commissions for the brokers.
·   No Supervision – You wouldn't find anyone to let your problems know in case the mortgage borrower isn’t working up to your expectations.

Mortgage banks
The loan officers at the banks are somewhat mortgage brokers with the only difference that they work for the banks. They do the same things regarding consulting and helping you decide on the mortgage that suits you the best. They don’t work independently and are paid by the banks.

Pros and cons of Mortgage Banks
The following pros and cons will help you decide if you can go for the mortgage banks to get your mortgages:
Pros
·   Appointment times are flexible.
·   Perks and waivers on appraisal fees available.
·   Security
·   Lower costs.
Cons
·   You’ve to work out the negotiation all by yourself.
·   Shopping around is necessary.
·   Not better than rates offered by mortgage brokers.
·   Credit scores are paid importance to.

Now that you have learned and understood the pros and cons of both mortgage brokers and mortgage banks, it won’t be difficult for you to make your choice. It all depends on how well you can negotiate and the benefits that you’re looking for as you go ahead with your mortgage.

Author Bio:  Stephenie Miller is a prolific writer with specialization on various aspects of finance. Her articles on debt, mortgage industry, refinance, real estate and personal finance are valuable guidelines to the readers.

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