SMART ASSET

When buying or refinancing your home, you want to get the best deal on your mortgage. To find the lowest interest rates and best terms, you will need to decide between working with a mortgage broker or bank to get your loan. Both offer a variety of mortgage products to choose from. A mortgage broker matches borrowers with a number of mortgage lenders while working with a bank directly could lead to fewer fees and more discounts. Here is how to tell which is better for your mortgage needs. Consider working with a financial advisor as you explore your mortgage options.

WHAT EACH ONE OFFERS

Mortgage brokers are independent mortgage professionals who work with a variety of lenders to offer home loans. Because they offer mortgage products from multiple lenders, they can find loan products that fit your needs. Additionally, a mortgage broker can save borrowers time because they only need to fill out one application to receive quotes from multiple lenders at once.

When you work with a bank to get a mortgage, you may receive discounts on your interest rate or closing costs based on your relationship with the bank. Even if your account balances are small, the bank may still waive some costs because they do not have to pay a third-party mortgage broker a commission on your loan. If you are not already a customer, the bank may also incentivize you to open other accounts or buy investment products to establish a relationship with you. For example, you may receive a discount or bonus for opening a HELOC, credit card or checking account in conjunction with your mortgage.

HOW THE TWO COMPARE

Homeowners can get a quality mortgage for their home when working with a mortgage broker or directly from a bank. But how do you decide which is better? Here is how to compare a mortgage broker vs. bank when choosing where to get your home loan:

Time to apply — Mortgage brokers take one application from borrowers, then shop their profile among different lenders to find the best quotes. When working directly with a bank, borrowers need to apply to each one individually to receive multiple quotes. Filling out multiple applications takes extra time and increases the possibility of data entry mistakes.

Fees and costs — A mortgage broker is paid by the borrower, the bank or both for their services. This may result in higher closing costs or interest rates for the borrower. Banks may reduce the interest rate or closing costs based on relationship pricing for good customers. Additionally, they do not have to pay a third-party broker when you deal directly with the bank. This can lower the total fees you will pay for your mortgage.

Products available — A bank can only offer the mortgage products that it has available. If one of those loan programs is not a good fit, you will either have to settle for one of its products or seek another lender who may have better loans. Mortgage brokers, by definition, work with numerous lenders so they have access to more home loan programs. They can shop your application around to find a mortgage that works best for your situation. For example, you may need an FHA or VA loan or a loan for selfemployed borrowers.

THE BOTTOM LINE

Whether you choose to work with a mortgage broker or a bank to get a loan for your home, you should be able to negotiate a favorable interest rate and closing costs. When deciding between a mortgage broker versus a bank, focus on what is most important to you. Mortgage brokers save borrowers time and can shop their loans around to multiple lenders. Whereas a bank may offer relationship pricing and lower closing costs to reward you for being a customer.

TIPS FOR REDUCING CLOSING COSTS

When applying for a mortgage, there are many opportunities to reduce your closing costs by negotiating or shopping the services around. The Smartasset closing costs calculator provides estimates of what closing costs should be based on your location, the type of loan you are getting and the amount of your loan.

A financial advisor can help you with more than your investment portfolio. Some financial advisors provide insights into all facets of your financial life, including how mortgage payments may affect your ability to reach your other money goals. Finding a qualified financial advisor does not have to be hard. Smartasset’s freew tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you are ready to find an advisor who can help you achieve your financial goals, get started now.use Smartasset’s mortgage comparison tool to compare mortgage rates from top lenders and find the one that best suits your needs.

Enter the relevant data in Smartasset’s no-cost mortgage calculator to get a quick estimate of what a monthly mortgage payment with taxes, fees and insurance will be. ■