Bank or Mortgage Broker – Which Should I Choose for my Home Loan?
Do not overlook your mortgage broker or bank, if you need financing to buy a home in Long Island NY. Brokers have numerous lenders at their disposal, while local banks are restricted to certain programs and guidelines. There are advantages and disadvantages of using both, and these depend on your available funds, your ratio of debt to income, and your credit score. The following information covers the key points you need to know to decide who to use.
Your Local Bank
Working with the organisation that holds your account would seem like a logical choice. Nonetheless, you should familiarize yourself with what advantages it offers. Prior to seeking any kind of financing, it is wise to gauge how realistic your request is. Getting hold of a report about your credit profile is an effective way of doing this. As well as your credit score, this report lists all your liabilities. Take the minimum payments for these amounts each month, then divide them by your monthly salary to calculate your ratio of debt to income. This is always a vital factor, when applying for a loan.
Local banks are ideal for borrowers who have good credit scores, substantial down payments and a small debt to income ratio. If you already have an account with the organisation, so much the better. Fairly often, assuming that your credit profile is outstanding, you can get a rate of interest half a point below what you could get from a mortgage broker.
Notwithstanding, local banks are not recommended for unconventional loan applications. The majority of local banks follow stringent underwriting rules and guidelines. If you fall short on any of the key criteria, banks will decline your application.
Your Mortgage Broker
The mortgage industry came under increased scrutiny and pressure, after the market collapse. Nearly a decade later, the industry looks considerably different. The most notable difference is that holding a license is now mandatory. This means that modern mortgage brokers should be competent and trustworthy.
The best advantage offered by mortgage brokers is that they can work with numerous lenders simultaneously. Brokers often have twenty or so banks that they can use at any given moment. They use lenders that follow looser guidelines than local banks. This enables borrowers with less than perfect credit scores to get their loan applications accepted.
Mortgage brokers can come unstuck though, when they believe that they can close all deals that come their way. If you use them for a deal that winds up falling through, you could lose your deposit and miss out on a good property.
Final Thoughts
Contrary to popular belief, your credit rating does not drop each time it gets pulled. In truth, you are permitted to do some shopping around, while looking for a mortgage, with no adverse effect to your rating. Prior to starting, learn as much as you can and get clarification on anything you are unsure about. This way, you can choose the right kind of financing for your circumstances.