Owning a home is a major accomplishment. When an individual is making their first home purchase it’s a big step. For the first time home buyer, the process can be very overwhelming. The terms used in mortgage lending can be confusing and you may have no idea where to begin. For starters, you have to decide if you will be working with a mortgage broker or a bank manager. What is the difference between the two and how can they help you obtain a mortgage?
Difference Between the Two
For starters, it is important to learn your options and determine the difference between a mortgage broker and a bank manager. A bank manager is an individual who works at a financial institution that will lend you money for a mortgage. When you work with a bank manager, you are working directly with the bank. A mortgage broker is an individual who serves as a middleman between a mortgage lender and a bank. Often times, individuals will be better served by working with a broker to obtain a mortgage, especially if no credit or bad credit exists.
Visiting the Bank
When you meet with a bank manager, you will need to fill out an application for pre-approval. This will determine if you qualify for a home mortgage, how much you qualify for and your interest rate on the loan. In many cases, potential home owners find they do not have sufficient credit to qualify for the loan amount they wish to achieve or they do not qualify at all. This is when individuals turn to mortgage brokers.
What the Broker Can Provide
When you meet with a mortgage broker, you are working with an individual who has experience in finding ways to fund a mortgage. Brokers work with lenders which can include private lenders or financial institutions. Brokers can compare mortgage rates for you to find the best deal based on your credit rating or personal information. You have the ability to look at several loan options due to the number of entities the broker works with.
Brokers tend to find loan options for individuals who are considered a risk by the bank. If you find that you have insufficient credit, be it no credit or a low credit score, a mortgage broker may be able to find you a solution.
Basically, your comfort level will determine what type of lender you choose for your mortgage needs. You may feel more comfortable working with your standard financial institution in which you already bank with. However, it is recommended that you speak with a mortgage broker to see if a better deal exists. You may find that you can get a lower interest rate with a broker, paying less each month for your new home.
At Mortgage Guys, we want to work for you. Let us provide you with a mortgage quote to help you find the home of your dreams. We cover all areas of home lending including information on mortgage insurance, first time home buyers, refinancing and more.