Mortgage Basics: Information for First Time Home Buyers

Mortgage Broker/Banker, or Credit Union?

What is the difference? Why choose a mortgage broker? Many people would rather deal directly with their bank or credit union. In some cases that may be a good choice. Credit unions often provide good interest rates to members, if you fit into one of their programs, but both banks and credit unions often have a limited number of different types of loan programs available, all with rigorous requirements. It may be impossible to get a mortgage loan from one if you are self-employed, have past credit problems, want 100% financing, or for a variety of other reasons. Does that mean that you can't get a mortgage? Of course not. There are many specialty loan programs out there, but you have to be able to find them. Many lending institutions offering such niche programs only work with brokers, not the public at large. Finding specialty programs to fit your situation is one way a mortgage broker can help you by making many different loan sources and programs available to you. The other way that using a mortgage broker benefits borrowers is because they are able to shop, not only more programs, but more rates. Because they have more resources available to them, they are usually able to find a better interest rate than you could by checking one or two sources. Mortgage brokers are also able to shop wholesale rates, not the retail ones you would be quoted, so they might be able to obtain a lower interest rate than you could if you walked into the same lending institution wanting the exact same loan.