For many people around the world a house is the largest asset they will ever own, and so the decision of buying one can be truly daunting. Getting a mortgage involves responsibility and it can very well become a burden if dealt with wrongly, or if the all the aspects are not taken into account.
There are statistics showing that approximately 50% of mortgage seekers settle upon the first loan offered by their own financial institution, without further research or interest in the subject. Very often people do not demand more information about other possible loans, and instead agree with any type of mortgage offered, without realizing the possible repercussions of their actions.
Regarding the services of consulting offered to home buyers who decide to get a mortgage loan, there are two types of professionals that are available, and those are bank loan officers and independent loan officers (most often mortgage brokers).
A loan officer at a bank or any other financial institution is normally the pleasant person that presents the institution’s services, their job being that of accepting the application that the client has handed and then pass it on to other departments of the institution. Also called “mortgage loan originators,” bank loan officers may recommend an appropriate type of application, as they specialize in commercial, consumer and mortgage loans.
On the other hand, a mortgage broker generally offers a larger variety of services, including advising the client about the best loans available on the market (without settling on a single financial institution), communicating directly with the underwriter and gathering and assessing the necessary documentation for the process to ensure the approval of the loan.
Many people prefer to go through the traditional procedures, which involve approaching their personal bank and dealing with the bank loan officer, without accepting another route.
What happens, then, if you decide to use a mortgage broker?
First of all, there is the generally wrong assumption of extra fees that come along with the services of a mortgage broker, which makes people avoid considering the option in light of the already huge costs that await them with the mortgage loan. But in reality, the assistance that mortgage brokers offer will not cost much more (if at all) than that received through a big bank, as mortgage brokers rely on the commissions they get from the mortgage loan value, which can vary from 0.5% to 1.5% in some situations.
Moreover, the overall cost when using a mortgage broker may actually be lower, as mortgage brokers have many sources of loans available to choose from, in comparison to a bank, who will only have a limited number of loan products to offer, because while loan officers, who work to sell mortgages originated by their employer, have quite a wide selection of loan products to offer, those originate from a single financial institution, which, in many ways, makes them much more limited than in the case of mortgage brokers, who will have at their disposal many loan types from various financial institutions.
The difference between bank loan officers and mortgage brokers is undeniable, but while it appears that mortgage brokers will offer a larger variety of options at an overall lower cost, it cannot be ignored that a large number of home buyers prefer the comfort that the familiar loan officers of their own bank give them in such a big decision that will affect their entire lives.