Banks or Broker is a question we get asked all the time from buyers regarding a home loan. They ask “what is the difference between a Mortgage Banker and a Mortgage Broker”? There are a number of differences and we suggest that buyers use a loan broker instead of going direct to a lender, such as a specific bank.
We suggest that buyers never go from one bank to another, to another and then to another, and so on in their search for the best rates and loan program. Each time a buyer’s credit is pulled and checked it created an additional “ding” on their credit score. When a person’s credit is checked enough times with enough “dings” the buyer has a lower credit score than when they began shopping for a loan — sometimes to the point they will not get a loan at all.
The advantage of using a “Broker” instead of a “Banker” is that by using a broker, the buyer will have the advantage of a vast network of lenders across the U.S. The loan broker has the capability to search through their databases of the many different loan programs so they can present the buyer their options that are best suited for their individual needs.
Key benefits are:
- Loan brokers usually have direct access to more than 40 different banks.
- If 1 bank has 20 loan programs to offer, a broker with 40 banks has over 800 loan programs to offer. This means more competitive rates and lower costs to the buyer.
- A loan broker “may” be able to offer programs with a smaller down payment because of their flexibility.
There are also issues about licensing – many lenders inside of banks are not licensed. Want to read about licensing requirements for Arizona lenders — visit this blog post on the topic.
If you are a buyer thinking of buying a home in Arizona, it is critical to become pre-approved for a loan BEFORE expecting to go out and being to look for a home. Doing so helps a buyer be sure they are searching in the correct price range. It also establishes that the buyer is a “serious” buyer.
And once the person is ready to make an offer, it is mandatory in Arizona that an offer is accompanied with what is called a Pre-Qualification document – (See Sample). This document is signed off by a lender after the lender has done their due diligence and preformed a credit check, etc. saying the buyer is qualified to buy the home they are making the offer for after .
If the buyer is planning to pay using cash the buyer needs to get the institution where their Cash is held to provide a letter on the institution’s letterhead that says buyer has “liquid funds in excess of xxx available for their immediate use” (xxx= the amount the buyer plans to spend to make the purchase).
We can make a referral to you of reliable Arizona loan brokers as needed. In full disclosure we do NOT get any referral fee or many any money whatsoever from a lender who we may refer you to.
Contact us and let us know how we can help.