Bank or Broker: Who Should I Get My Loan From?

Planning Stage

Here is your goal: get the best deal. You may find the best loan with a bank. You may find it with a broker. It all depends on your particular situation and what sort of loan you require.

 

The best way to ensure that you are getting a good loan is to get estimates from several different places. Find out what your bank and a few brokers have to offer. The results of your investigation will give you an idea of different options, and will also give you an idea of cost so you’ll know if someone tries to charge you too much.

That said, there are some differences between bank loans and broker-arranged loans. Here are a few trends we’ve noticed:

Bank pros:

  • Banks offer a wide variety of home loan options without involving different lenders.
  • There are often not as many additional fees and middlemen to pay as there are with a broker.
  • Banks handle large quantities of loans, which means they can cut costs a little.
  • Employees usually get paid by hour, so they won’t try to get extra money from you.
  • You already have an account with your bank. They have access to the information they will need about your finances.
  • Local banks understand local home issues that lenders from other places might not understand, like well water sources or septic tanks. A lender who does not understand some of the specifics on the home will delay the loan while they ask questions.
  • Banks will predictably give loans to people who fulfill their specifications: good credit, stable job, good income, and long time residency.
  • You can build off of your existing relationship with your bank, making use of any available discounts.

Broker pros:

  • Brokers have numerous lenders they can match with a client depending on the client’s specific needs.
  • Brokers can find loans for people who do not fulfill typical bank loan requirements, like people who are self employed and cannot prove their income, have bad credit, have recently switched jobs, or have other peculiarities about their financial situation.
  • Brokers tend to give their clients more attention than banks can afford, and will walk them through every single little step.
  • Brokers sometimes offer comparable rates to bank rates, although they typically charge more since they deal with smaller quantities.
  • Brokers are usually a lot easier to contact than banks.

When you are inquiring about a loan, make sure to ask about all possible expenses, not just your monthly payment amount. Find out how long they think it will take for the loan to go through. Find out about all the fees they will charge you for their services. Make sure you find out whether a loan is a fixed or adjustable rate loan. Choose to get your loan through the person you can trust, and who offers you the best interest rates for the best fees