Did you know that you could get a mortgage from your bank? They aren’t just a depository. You can get a variety of loans, including a mortgage there, but should you?
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Not everyone is best suited for a mortgage from their bank. Even if a person is a good candidate for a bank mortgage, it doesn’t mean that their bank is the right one. We explain why below.
Banks Have Limited Programs
Banks have only the programs that their bank offers. They don’t have the luxury of offering hundreds of other loan programs from lenders throughout the nation, like a mortgage broker can do. That doesn’t mean that your bank doesn’t have a program that suits your needs. But there is a chance that they won’t.
You have to think long and hard about your situation. Do you have a straightforward mortgage situation where you earn a salary, you’ve had your job for several years, you have very few debts, and a decent down payment? Yes, we know that sounds like the perfect situation and that’s what banks want most of the time.
If you don’t fit that ‘perfect borrower’ mold, you may not find the loan you need at your local bank. That doesn’t mean that no bank will be able to provide what you need. It does mean you should shop around until you find the loan that suits your needs the most.
What About Mortgage Brokers?
Mortgage brokers have their place too, especially for those ‘out of the mold’ borrowers. Brokers have relationships with many lenders, sometimes hundreds of them. This means the possibility of you finding a loan that suits your needs may be much higher than it would be at your local bank.
Mortgage brokers often get a bad rap because of what happened in the past. Today, any lender is very closely watched. All lenders must control how much they charge borrowers for a loan. Even if you are a high-risk borrower, you won’t pay excessive fees any longer – it’s not allowed.
Mortgage brokers do serve their purposes and it’s to help you find a loan when your local bank or any other banks you’ve tried just don’t have the program for you.
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Shopping Around is Important
The one piece of advice we can give to you is to shop around. Apply for a mortgage with your local bank, a few other banks, and a mortgage broker. Then take all of the quotes you receive and look at them side-by-side. This way you can see who has the best loan program with the least costs for you.
You may find that your bank has the best offer. In that case, take it. You can have your mortgage at your bank, who will probably service it too. There’s a benefit to having all of your banking, including your loans in one place.
You may find that another bank can cater to your lending needs a little better. Just make sure you get to know who will service your loan and evaluate their services before you sign on the dotted line. Remember, your mortgage could be something you have for the next 30 years. You want to make sure you can deal with the company servicing your loan.
You may also find that a mortgage broker has the best approval for you. Mortgage brokers don’t fund the loans. In fact, they don’t even underwrite them. They serve as the middleman in the whole process. They match you up with a lender, do all of the legwork to get your loan approved, and then get you to the closing table. In the meantime, the lender is doing the underwriting and providing the funds. Again, in this case, you’ll want to know who will service your loan so that you can make sure it’s a company you can trust.
So is your bank the best place for a mortgage? It absolutely could be. But, you may also find that a mortgage broker or another bank has a better program for you. Shopping around within a few week period won’t hurt your credit score and it will give you the chance to find the best program for you.
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