Should you go to a big bank for your mortgage or look for a mid-tier lender? This is a common question among homebuyers who are searching for the best mortgage options.
Even the smallest of differences in your interest rate can cost you or save you thousands of dollars over the course of a 30-year mortgage, so it’s essential to work with someone who has your best interest in mind.
Can a mid-tier lender personalize your mortgage application journey and help you understand loan offers? Or is a financial institution such as a bank the best route for you?
Let’s take a look at the differences between a bank and a mid-tier lender so you’ll be properly prepared to shop for a mortgage.
What is a Mid-Tier Lender?
A mid-tier lender, as known as a mortgage broker, is the middleman between you (the borrower) and mortgage lenders when you’re shopping for a home loan.
Mortgage brokers work with multiple lenders, such as banks, private mortgage companies, and credit unions, so that they can offer a wide variety of options. Having several options is great for flexibility, but it can make the process of working with a mid-tier lender a little overwhelming.
How is Bank Different than a Mid-Tier Lender
Unlike mid-tier lenders, banks have limited choices and a much more strict qualifications. Banks often offer great options for loans, but only their customers know about these options.
Here are a few advantages and disadvantages of working with a bank.
Advantages of Working with a Bank
- Lower interest rates for those who have a good financial profile
- Banks will service the loan after closing
- Special rates and benefits to existing customers
- Offers specific loan programs
Disadvantages of Working with a Bank
- Less loan options
- Not experts in mortgage lending
- Longer closing times
- Stricter lending standards
- More fees
- Less flexibility
Whether you work with a mid-tier lender or a bank, each comes with their own benefits and disadvantages. If you want to ensure you get the best loan for your unique situation, get quotes from multiple lenders and compare rates. This can be easily done online with a mortgage calculator.
How Mid-Tier Lenders are Different Than Banks
From a more personalized experience to more loan options, there are many things that a mid-tier lender offers that a bank cannot.
Advantages of Working with a Mid-Tier Lender
- Experts in mortgage lending and stay up to date in training
- Better advice and loan guidance
- Willing to negotiate terms
- More loan options
- Fast closing time
Brokers can finance tricky deals because of their knowledge and various lending partners. They do all the legwork for you, working on your behalf with the lender.
And if you have a low credit score, or are self-employed, the extra flexibility that brokers offer can often help you get the best mortgage for your situation.
One of the biggest disadvantages of working with a broker is that they can sell your loan after closing. Whereas a bank will service it even after closing.
Why You Should Choose a Mortgage Lender over a Bank
As you can see, banks and brokers are both valid choices when considering a mortgage loan. However, you want to work with someone who is going to get to know your unique situation and work specifically with you to find the best mortgage.
Often the qualities are found in a mid-tier lender because they make it their mission to get you the best results. From mortgage interest rates and down payments to fees, mortgage points, and more – there’s a lot of moving parts that go into a mortgage. An experienced mid-tier lender will take the time to explain how all of these variables will work together and compare loans with you.
Still not sure what type of lender is right for you? We specialize in empowering homebuyers to get the best deal possible. To make this process easier for you, we have partnered with one of the best mid-tier lenders that customizes to each client in Guaranteed Rate. Any user that goes through our site – using this link – gets an amazing deal! No lender fees and you’re guaranteed their lowest rate available through their company.
If you want help from an expert, get in touch with one of our experienced loan officers today!