When it comes to life’s important questions, “What’s the difference between a mortgage broker and a mortgage banker?” really can’t compete with “What do you want to be when you grow up?” and “Will you marry me?” Compared to these classics, the question sounds like the set up for a joke, but it’s not–at least, not when you’re trying to figure out the best way to finance a new home. If you are in the market for a new home, understanding the advantages of using a mortgage broker instead of a mortgage banker can make a world of difference.
Answering the Right Questions
To understand the difference between brokers and bankers, borrowers need to know the answer to a few related questions:
- Who’s the boss?
- Who can offer the most options?
- Is there a middle man?
Who’s the Boss?
Savvy brokers and bankers will probably both claim that they work for the client, and to an extent, this is true. Both brokers and banker try to match their clients with a suitable financial product that will enable them to buy a home they can afford. The difference between them is that, because bankers work for a bank, they can only offer their bank’s products.
As helpful as bankers may be, they ultimately answer to the bank, not the borrower. If they can’t find a way to make their bank money lending to the borrower, they can’t lend to the borrower. Brokers, on the other hand, are free to shop around on their client’s behalf at multiple wholesale lenders, including credit unions and savings and loan-type lenders.
Who can offer the most options?
It follows from the answer above, that brokers can generally present more options to the potential homeowner. Because they are not limited to offering the products of just one bank, brokers are able to find their clients the best deal possible. They don’t get paid unless their client gets a loan. This means they are motivated–and able–to find innovative solutions for buyers in unique circumstances or who fall outside the parameters banks typically adhere to for borrowers.
Is there a middleman?
When you work with a banker, you are working directly with a particular bank. In contrast, when you work through a broker, your broker serves as an intermediary between you and the loan provider. At first glance, it might seem like using a broker complicates things unnecessarily–why insert a middleman into the process when you could work directly with a lender? But the banker doesn’t personally approve your loan; they have to pass it on to another department. In other words, they’re a middle man, too.
Asking the Right Question
Ultimately, best way to understand the advantage of using a broker over a banker is not by comparing their answers to your questions; it’s by comparing the questions they ask themselves.
The banker asks, “Can I get this loan approved?” If their bank doesn’t approve your application, there’s nothing more they can do. They don’t have the authority or the flexibility to find a creative solution to meet your needs. The mortgage broker, on the other hand, asks himself, “Where can I get this loan approved?”
The difference between these two questions makes all the difference for the borrower. Because brokers work in the buyer’s interests and not the bank’s, a broker who gets a “no” can keep going. He can create a customized solution on the fly and continue shopping around until he gets a “yes”.
AZ Mortgage Brothers are proud to be mortgage brokers and have been coming up with innovative mortgage solutions for our clients for years. Contact us today if you want to experience the broker advantage (and the AZ Mortgage Brothers advantage!) for yourself. You’ll be glad you did!