Pros and Cons of Banks, Brokers, Credit Unions, and Online Mortgage Companies

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Filed under: Qualifying for a Mortgage Loan

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Seems like these days there are plenty of places where you can obtain financing for a home.  There are pros and cons to each so in an effort to help you keep your clients well informed, today I’ll provide full disclosure on the 4 most common sources of mortgage loans.

Banks

Pros:  If you already have a solid relationship with a bank (checking, savings, prior mortgage, business bank accounts, etc…) then your bank may offer you discounts on rates or fees.

Cons:  Most banks have a limited number of programs so if you don’t fit into their “box” it may be difficult to qualify.  Also, if you’ve had credit issues, banks tend to be less lenient.  Quite frankly, any discounts your bank may offer you can usually be matched by another lender.

Credit Unions

Pros:  Credit unions often are able to offer lower rates and fees than banks, simply because they have less overhead and fewer expenses than a bank.

Cons:  Just like banks, credit unions will almost always be limited in the loan products they can offer.  If you run into a problem qualifying for one of their programs, they’ll seldom have a variety of options.  This could leave your deal in jeopardy.  In addition, you’ll need to be a member to take advantage of their loan programs.

Online Mortgage Lenders

Pros:  If you’re a fan of digital technology and don’t mind uploading all of your personal documents to a website, then you might love the online mortgage process.

Cons:  Very little human interaction.  If you are a buyer and need to rely on a seller to accept your offer, you might get some hesitation by sellers and listing agents who are nervous about your online mortgage.  Real estate is still a person-to-person industry and relationships and trust are key in just about every local market.  You don’t get much of that with an online lender.

Mortgage Broker

Pros:  If you don’t fit into that traditional mortgage “box”, brokers are usually the best way to go.  That means if you are self employed, have credit challenges, a unique job situation, or any other extenuating financial circumstances, a broker will have access to the widest variety of loan programs and probably have the best chance of getting you the financing you need.

Cons:  Some brokers may charge higher fees so you’ll want to ask plenty of questions, perhaps get a couple of different quotes, and perhaps most of all – work with a reputable broker that has a relationship with the realtors in your local area.  This won’t guarantee you of getting the “lowest rate and fees” possible, but it will usually be extremely competitive.

If you have questions, I have answers!  Give me a call and we can discuss any facet of the mortgage process.

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