A few years ago, when I made my first home purchase, I was inundated with recommendations on who to use for my potential mortgage. It was overwhelming to say the least.
On the internet, I could see a lot of recommendations to go with the mortgage broker because you have someone working not for the bank to get you the best deal by shopping around for you. The rates are definitely cheaper online compared to posted rates at the big banks. Also, one of my colleagues recommended a mortgage broker to me that she was really happy with.
On the other hand, some of my family and friends recommended that I stick with the big banks and shop around for a mortgage specialist within the banks. That way, I could do negotiations for myself and work with the banks to find the best rate.
Well, I considered both these options and met with a mortgage broker and also a mortgage banking specialist from the big banks.
Why Go For A Mortgage Broker
The mortgage broker acts as the middleman between the big bank and you. They do the negotiation and dirty work for you. Oftentimes, they find a good rate for you because they opt to go with lenders that are smaller. They also contact lenders that may lend you money when a bigger bank normally wouldn't because of your credit score or even debt. Basically you get a better deal and a better rate most times if you go with a mortgage broker.
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Another reason you would go for the mortgage broker is that you like to root for the underdog. Mortgage brokers often work for themselves. If you like to support individual business rather than the big five, going with a mortgage broker might be a better option for you. I met the mortgage broker in question on Valentine's Day (I felt really bad because her boyfriend was outside waiting to start their date) over a cup of coffee to talk about mortgage options. And we didn't even use her as a mortgage broker in the end (eep!).
Why Go For A Mortgage Specialist At A Bank
Brand loyalty. Another, Home Equity Line of Credit. Okay that was a few words. Though I am sure you can get a loan attached to a HELOC from a mortgage broker, it was just so easy to look around at different big banks to see the conditions for the HELOC. Although I have not touched my HELOC or loaned any money from it, it is nice to have that option available if the need arises. It was nice to also have the option of looking at the mortgage options and availability through the big bank website. I could read the fine print and make a decision for myself.
A lot of people just stick with the same bank they bank with because they feel loyal to them. I personally went with a different bank because the HELOC plans through my day-to-day banking package wasn't apparent.
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Another reason to go for the big bank is that you like negotiating. Personally, I was able to knock off 0.2% off the posted rate at the time because of my hard core negotiating skills (haha, okay probably not that hard core and the amount is quite underwhelming but it's better than nothing). I also enjoyed the bank calender they sent out and the generous gift card the bank sent for using them.
I met a few banking mortgage specialists and they were nice enough. Even within the same bank (but at a different branch) I was quoted different mortgage rates. That definitely proves the importance of being able to negotiate, knowing someone they like at the bank (e.g. if you have a friend who recommended you that is a good client to them, they will also treat you nicely), and sticking to your guns in terms of a rate you want.
Mortgage Broker vs Bank Mortgage Specialist?
Well, the choice is individual. Some people prefer a mortgage broker, and some like I, prefer the big banks. I don't think it's logical of me to want to pay more for a mortgage when I could be saving thousands, but sometimes humans are not logical.
Readers, which one did you use?