Whether you are looking to secure your first mortgage or you already own your home and are thinking of moving, getting expert help is sensible.
Of course there are significant decisions to make before you even decide on the type of finance professional to work alongside. So what are the differences between mortgage brokers and loan officers, and which is best for your needs?
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Benefits & pitfalls of a broker
As the name suggests, a mortgage broker is essentially an intermediary between borrowers and lenders. They will know all about today’s mortgage rates and will be able to scour the market for the best deals from a wide variety of providers.
This is great in terms of the variety it provides you, and the extent to which you can pick and choose from attractive packages that you might not otherwise encounter when doing your own research.
The main downside of dealing with a mortgage broker is that, as a middleman, they will be looking to take a cut of any deal which they successfully arrange. In some cases you will need to cover their fees yourself, and in others they will take a commission from the lender.
Because of the potential for added costs, it is necessary to find out about how brokers levy their fees upfront. You can then decide whether or not a particular broker is the right fit for you.
The pros & cons of a loan officer
While brokers work independently and pair clients with lenders, loan officers are generally people who are employed directly by banks and other types of mortgage providers.
Because of this, loan officers are typically limited to offering deals that are made available solely by the organization that employs them.
Whenever you visit a branch of your bank, you will probably have seen a loan officer at the bricks and mortar location, and this is a long-established role as well as one which has a thorough training and accreditation process attached to it as a result.
The primary reason to get in touch with a loan officer rather than going through a third party is that they could offer you unbeatable rates, so long as your relationship with the lender is solid and your finances are up to scratch. Your bank’s knowledge of your history could also play in your favor, as a loan officer could be capable of approving a mortgage application in unique circumstances even if these would normally work against you.
The biggest problem is of course that you will only get mortgage packages from the lender which employs the loan officer, limiting the scope of your comparison capabilities.
The areas in which broker & officer responsibilities intersect
While it should be obvious that mortgage brokers and loan officers do have major differences between them, there are also many areas of crossover as well.
For example, both will be able to help you apply for a mortgage and both will do their best to ensure that you have the highest chance of being approved, since of course it is in their interest to win over customers.
As a result, there is not always a ‘right’ answer regarding whether you should choose a mortgage broker or a loan officer when shopping for a home loan. If you want the broadest choice, the former might make the grade, while if you have a solid relationship with your bank, the latter could come up trumps.
Do your research and consider your own financial situation so that you can steer yourself towards a specific decision in this instance.