Mortgage Broker vs Mortgage Banker: What’s the Difference?

A home is the most expensive purchase most people will ever make. The process can be intimidating, especially to someone who is buying a home for the very first time.

When it comes time to buy, one choice that homebuyers face is the question of mortgage broker vs. bank. So what’s the difference? When you get a mortgage through the bank, you work directly with the bank to get financing for your dream home. Working with the bank limits you to the interest rates and loan programs within their own company. When you use a mortgage broker, your broker can shop around with different banks  to find the best interest rate and get the best price for you and your budget.

Credit card debt in America hit a record high in 2018 with the average person having a balance of nearly $6,400. Your credit usage, and credit score, can impact whether or not you can even qualify for a mortgage. If you are dealing with bad credit, or have other specialized needs when it comes to buying a home, you can get turned away by the big banks. That’s where a mortgage broker can help. A broker can provide a more personalized home buying experience and work with you and whatever needs you have, whether it is bad credit, limited credit history, a low down payment, or even limited closing costs.

If you’re worried about dealing with a middleman instead of the bank directly, don’t be. After the housing crisis of 2008, Congress passed the SAFE Mortgage Licensing Act to protect borrowers. This legislation prohibits brokers from pocketing premiums from lenders in exchange for directing borrowers to high interest and high risk loans and requires brokers to pass state licensing exams in to prove they know the rules when it comes to financing homes.

Buying a home is a highly personal decision. When it comes to getting the financing you need, wouldn’t you want to work with someone who puts your needs, and your financial situation, ahead of their bottom line?