Bank or Broker? Who to Trust in 2020
Owning a home is a financial decision that might have repercussions in the future. Dealing with the mortgage the right way—paying on time, avoiding debt—would surely result in the homebuyer eventually paying the equity of the home he or she purchased. Dealing the mortgage the wrong way—refinancing in the wrong time, failure to keep up with financial obligations—would definitely increase one’s debt, not only affecting his or her credit rating but may potentially face the possibility of a foreclosure. Of course, no one wants to experience the latter, and as such, the individual may find seeking professional help an integral part of searching for the best mortgage payment deals and rates.
Before, when searching for homes, prospective buyers turn to banks. Not only do these financial institutions provide services involving personal banking and credit cards, but also business loans, personal loans, and so on, especially mortgages. Although they are still relevant in today’s financial world, a so-called “new kid on the block” emerged in the industry of mortgages, and these are the mortgage brokers. Also known as home loan brokers, they are licensed professionals who work with multiple lenders. They also have access to a plethora of rates that homebuyers can find enticing to take advantage of. What they do is that they provide these clients with the lowest rates.
With the playing field now even, it is now really up to the people searching for homes to choose between the bank and Family Business loans and home loans brokers. To put this into perspective, here is what homebuyers can expect from the two:
- In terms of market share, banking institutions who have been there in the mortgage industry take up 60 percent, whereas mortgage brokers take up the remaining 40 percent.
- The benefits of availing the services of a bank for taking mortgage rates and payment terms is that it allows the person to maintain an already existing working relationship with a banker. This is often the reason why a lot of people searching for homes trust banks; they are familiar with them and they trust them to take care of the mortgage services. Conversely, banks can only look up and provide their own mortgage rates and it is often the responsibility of the client to deal with it.
- The benefits of availing the services of a mortgage broker, meanwhile, is that he or she will do everything on behalf of the homebuyer, in which the former will provide the latter a list of potential lenders that have the best rates. From there, the homebuyer will decide which is best suitable for his or her needs. The downside of this, however, is that the broker may deem as untrustworthy, especially since a homebuyer hasn’t establish a working relationship with the broker yet.
Looking at what is listed above, it all comes down to personal preference. On one hand, people who have been used to going to banks for personal banking and dealing with credit cards can as well take advantage of the mortgage services these institutions can offer them. It also helps that they are familiar with the people at the bank. On the other hand, people might find it way more convenient if they enlist the services of a broker. Instead of visiting a bank, homebuyers are exposed to a person who has a portfolio of potential lenders, banks, and mortgage products. It also helps that they have someone who has years of experience in the industry, as well as the knowledge of the mortgage market. Whether homebuyers choose either a home loan broker or a bank, it is still important to decide what is best for them, considering the circumstances of their personal finance.