You're deep into your NYC home-buying quest. You have a decision to make. Who do you borrow through? A bank or a mortgage broker?
Let's see what each can offer you and throw in some other considerations too.
- Maybe you bank regularly with an institution. They know you. They have years of your statements. They want to maintain their relationship with you and this shared history may help you qualify more easily than with other institutions who don’t have all of your details at the ready. They may also be more inclined to grant small favors (Ex. Shaving off a percentage, lowering a fee, etc.). Your real estate broker may also have long term relationships with certain banks. Definitely ask your broker for recommendations; these relationships can help your whole process run a bit more smoothly and efficiently.
- A more direct borrowing experience.The loan is between you and the bank. If there’s a mistake on your application, you can usually resolve it pretty quickly and directly.
- More options. Mortgage brokers shop around for you. They are not loan officers of a specific bank and so they can offer you a variety of loan types and rates from various institutions. There are a lot less mortgage brokers now than there were before 2008. Still, it can certainly be worth contacting a few mortgage brokers so you have a point of comparison. No stone left unturned as they say.
Ask friends, family, and your real estate broker for recommendations on mortgage brokers. Also check out online reviews. Even if a broker gives you rates and loan types, that doesn’t mean that you’re obligated to utilize a loan through them. Mortgage brokers are paid when the loan closes; this fee is usually between 1% and 2% of the loan amount, frequently paid by the lender, but there are instances when the borrower pays the fee.
Both banks and brokers have things to offer and it’s totally normal and encouraged to contact several (2-4) borrowers. Your real estate broker can advise. This will give you plenty of options to compare.
The buying process can move quickly, so do take a breath, look at the options, and note the fees and services associated with the loan offers you compare.
Final Note: Locating a Lender Online
You may have also found online lenders during your research. These lenders can offer ease and convenience. Who doesn’t love an app?! They are definitely worth checking out, but remember that what you gain in convenience, you may lose in face-to-face relationship value. An app can’t advocate on your behalf. There are also some comparison websites out there that allow you to input some information and shop around; this is essentially a mortgage broker but run online.