If you are like most people, you do not have the money necessary to purchase a new home on your own. As such, you will be looking for someone to loan the extra money you need to complete your purchase. The good news is that you have more options available to you than you might think – irregardless of whether you’re buying a downtown condo or a new construction home in the suburbs. On the other hand, having so many options can become confusing and even overwhelming to those who have never purchased a home before. As such, one of the first things you will need to decide is if you want to obtain the money through a bank loan or a mortgage broker.
Buying a home is a major investment, so which option is best for you, a loan through a mortgage broker or a bank loan?
The reality is that there are pros and cons associated with both options. Therefore, making the right choice for your personal situation is dependent upon a variety of factors. For example, if you have a high debt load, if you have just switched professions, if you are self employed and cannot prove your income or if you have poor credit, it may be best to use a mortgage broker. This is because a mortgage broker purchases loans from a variety of mortgage lenders at wholesale cost and then sells them to another mortgage banker. Since their income depends on their ability to get you a loan, they are much more likely to go through the extra hassle of finding a good match for you. A bank loan officer, on the other hand, does not have a vested interest in finding a loan for you and is less likely to take a risk on you if you do not have a solid financial history.
While a mortgage banker is more likely to find you a loan despite your credit history, it is important to keep in mind that these loans typically come with extra fees and interest rates. Therefore, you will likely pay more to go through a mortgage broker than through a bank. Still, in some cases, mortgage brokers can offer better deals to those with good credit than a bank can offer. As such, it may be less costly to go through a mortgage broker even if you have good credit, but it is not likely.
Getting a bank loan is different from getting a loan through a mortgage broker because a bank does not have as many loan options available. This is because a mortgage broker works with many lenders while a bank loan officer represents just the bank for which he works. Still, despite the lack of options, most people get the best rates and deals when they obtain a bank loan. Of course, to get a bank loan, you will need to have a much stronger credit history. In general, you will only be able to get a bank loan if you have good credit, you have a steady job, you have a low debt load and you have proof of income for the last two years if you are self-employed.
About the Author – Eric Bramlett is co-owner and broker of One Source Realty, a boutique Austin real estate firm, and specializes in homes for sale in Steiner Ranch.
New Homes Section is a leading provider of new housing and home builder information. 
Trackbacks / Pings