Starting your homeownership journey includes a lot of critical decisions along the way. It will have its own advantages and drawbacks while keeping in mind, comfortability and financial capacity.
This includes your first step in the homeownership process. You’ll just have to choose your mortgage loan from banks or brokers that will suit you depending on your current situation and circumstances.
These decisions could have an impact on your long-term financial health. That is why we provided an ultimate guide to whether choose banks or brokers in your mortgage journey.
Mortgage Brokers
Advantages
Mortgage brokers are your middleman between you and lenders. This flexibility allows you to widen your access to lenders, banks, credit unions, trust firms, financial institutions, or even private mortgage lenders. You’ll have the opportunity to compare and snap the best offer from various options that favors your financial standing.
Mortgage professionals get results that we couldn’t get ourselves. They could easily get loan applications approved from lenders and even get mortgage loan options for bad credit borrowers.
They work on various parts including interest rates, down payment, fees, and more. They will educate you along the way and help you understand the difference from one offer to another as well as recommend better options for your purchase or refinance.
Mortgage agents will guide you through the complex mortgage application process for free. They do not typically charge until the mortgage is done or they earn commission from the lenders to whom they signed you up.
Disadvantages
As said before, mortgage professionals and brokers earn commissions from lenders. For that reason, this may lead to higher commission or interest yields than others. They may have an incentive from that lender and might steer you from one to another regardless of what is the best option for you.
To avoid these circumstances and to ensure that your broker is working hard for you, consider these pointers:
- Referral – recommendations from family members, friends, and trusted financial advisor or real estate agent could help you find a broker with good integrity and reputation in terms of his works.
- Service Fees – be upfront in asking how well they are compensated and how much are their services.
- Compute and Calculate – brokers could tell you how much of a loan you are qualified but it’s always your responsibility to indicate how much you will borrow and which rates and terms are agreeable to your current situation.
Bank Mortgages
Advantages
If you are the type of person that maintains good credit history and score while having stable financial health, banks would offer better rates for clients like yourself.
Furthermore, a certain level of trust could be developed if you and your bank are working together for a while. Trust and satisfaction go a long way therefore it’s a good investment such as buying a house.
If you decide to go to your bank, they will assign a home loan officer that specializes in your bank’s other product packages and services. These officers have extensive knowledge about your bank’s policies that provide information and offers that suit your financial needs and capacity.
Getting a mortgage application with your bank could also make repayments or monthly payments easier as you could automatically make payments from your bank to your home loan purchase or refinance.
Disadvantages
Getting a mortgage home loan from banks could limit your choices. You wouldn’t know if your bank’s rates and offers are better than others or if there are better choices outside of your bank.
A home loan for someone with bad credit increases the chance of higher interest rates and approval for a home purchase dramatically drops.
Even a small difference in interest rates and payments on mortgages could save you thousands from 25-30 year mortgage terms.
Questions to ask for both bank and brokers
- What options for loan could I get?
- What are my closing costs could be?
- Is there anything on my mortgage application that might get me delayed or difficult for approval?
- Do I qualify for government mortgage programs or special loans in my case?
- How long could my mortgage application take?
Get your credit ready
Your credit score and history play a major role in your mortgage application. You would want to make the best deal available for every competitive offer. That is why getting your credit ready could tip the scales in saving a lot of money or paying additional interest rates and charges every month.
- Pay your bills on time.
- Lessen your overall debt.
- Do not add additional loans and credit balances.
- Always use 30% of your credit power.
Homeownership takes a lot of commitment and money. Bank officers and mortgage professionals could genuinely help you in your dream home; however, you should not solely depend on their outputs. We need to be responsible for our own finances and familiarize ourselves with these lenders
If you’re credit, income, and assets are strong enough to make a straightforward transaction of a loan application, it is best to save time and direct your money through banks.
However, getting a loan with poor credit or if your mortgage application poses a challenge to you, it is better off to seek help in mortgage professionals that will help you in their flexibility and access to various lenders and offers.
Final Thoughts
In order to get the best of both worlds, the internet is a good place to start your search for quotes and other information in their respective products for a mortgage. Whichever option you will choose will be the right choice for your situation.
We are your best mortgage solutions provider in Canada founded by Faizal Garasia in 2019. We have a network of more than 90 lenders including the largest banks, credit unions, trust firms, and financial institutions across Canada.
Contact us at (416) 825 0142 or send an email to faizal.garasia@dominionlending.ca today for more information.
