If you’re planning to buy a home, it’s helpful to understand the distinctions between a mortgage banker and a mortgage broker, so you can make the best decision for your home financing needs.
Are you thinking of buying your first home soon?
Or maybe you’ve purchased a home in the past, but it’s been a while, and you want a refresher on your options for home financing.
You may be wondering… what’s the difference between a mortgage banker and a mortgage broker — and which should you choose for your loan?
Depending on your situation, there are advantages and drawbacks to either option.
The key difference between the two? Mortgage bankers directly loan you the money for a home; mortgage brokers serve as an intermediary, meaning they don’t approve your loan or directly provide the money for your mortgage — instead, they coordinate with the lender or bank on your behalf.
Pros of a Mortgage Broker
Each mortgage broker operates a little differently but, in general, here are some of the benefits you can expect if you decide to work with a mortgage broker:
Support with Paperwork
A broker can help guide you by specifying exactly what you need to provide in terms of documentation; because they work one-on-one with you, they’re less likely to request the same document twice, which may happen with a larger mortgage banker where multiple departments or employees are involved.
Loan Variety
Brokers may have more access to a variety of loans (since they’re not working with only one bank or lender), which could ultimately give you more options.
Challenging Situations
A mortgage broker may have more options if you have a less-than-favorable circumstance (for example, other lenders won’t qualify you for a loan because of a low credit score, lack of down payment, etc.).
Delegate Responsibility
A broker often allows you to be more “hands off” during the loan process, because they take on the bulk of the responsibility (for communicating with the lender, etc.). This may also save you some time.
Pros of Mortgage Banker
A mortgage banker also offers unique benefits, such as:
No “Middleman”
Since you’re working directly with the lender, they are more likely to be 100% familiar with their loan products and can address any issues or challenges immediately.
In-House Operations
Mortgage bankers often have an in-house operations team; in most cases, this will streamline the loan process, since there isn’t an intermediary or outside source that needs to weigh in on paperwork, decisions, etc.
Potential to Save Money
In many situations, working with a banker will save you some cash, since mortgage brokers charge a fee for their services; although, in some cases, the lender will pay this fee (this is something you’ll want to check on up front, if you consider going with a broker).
Close Sooner
Compared to a broker, a mortgage banker will often close your loan more quickly (sometimes, even earlier than you anticipated), since they are working with their own loan products and their own in-house staff — and no intermediaries are involved.
Which Should You Choose?
This really depends on your unique situation. If you’re just starting out on your home finance search, it can be helpful to get quotes from a variety of mortgage brokers and bankers.
Overall, if you have a fairly strong financial situation (good credit score, low debt-to-income ratio, etc.), you may save time and money by using a mortgage banker for your loan and avoiding the fees associated with mortgage brokers. On the other hand, there are brokers whose fees are comparable to mortgage bankers.
If you have a challenging or unique situation, such as a lower credit score, no down payment, or a high debt-to-income ratio, a mortgage broker might be better equipped to find a loan program for you. However, many mortgage bankers also offer loans for people with less-than-perfect financial circumstances.
Again, it will take some research to find your best option. That’s why it’s important to start early in the process, so you can find the right fit for your home financing needs.
Benefits of a Lender Like Waterstone Mortgage
At Waterstone Mortgage, we offer the best of both worlds. Because we are owned by a bank (WaterStone Bank), we have the security and financial backing of a mortgage banker. However, we operate independently, so we also have a wide variety of loan programs that typical banks usually don’t offer. In these ways, we are pretty unique.
Our clients can benefit from:
- Our in-house operations team (which streamlines communication and often creates a speedier loan process)
- Loan programs for challenging situations (less-than-perfect credit, no credit, no- or low-down payment options)
- A strong company history (more than two decades in business) and impressive feedback from our customers
- Our innovative technology, such as Element — which makes the mortgage process quicker and more transparent, and is something that no other lender offers
So, although we are technically a mortgage banker, we have many of the beneficial characteristics of both mortgage bankers and brokers.
If you’re interested in learning more about getting a home loan with us, find an experienced Waterstone Mortgage loan originator in your area or apply now.
