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Your First Step To Buying A Home: Deciding Between A Mortgage Banker & A Mortgage Broker (Explained)

January 23, 20244 min read

Your First Step To Buying A Home: Deciding Between A Mortgage Banker & A Mortgage Broker (Explained)

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Embarking on the journey to own your dream home is thrilling, yet the question many face is, "Where do I start?" The answer lies in a crucial choice – selecting the right loan officer. But they aren't all built the same. Let's dive in and explore the nuanced differences that could potentially save you $9,457 by making the correct choice.

Starting Right: Mortgage Professionals as Your First Stop

To kickstart your home-buying journey, let's begin by demystifying some essential terminology. Understanding these terms will empower you to confidently navigate the lending process.

When considering your first or dream home purchase, the instinct might be to start browsing sites like Zillow or Realtor.com. However, the optimal starting point is to contact a mortgage professional. These experts provide funding, guidance, and invaluable knowledge.

A consultation with a loan originator offers insights into your qualification status, applicable programs, budget breakdown, down payment considerations, maximum loan financing, purchasing power, and, crucially, your monthly mortgage payment—laying the groundwork for your overall home-buying budget.

Choosing the Right Guide: Mortgage Banker vs. Mortgage Broker

Now that we've established the importance of starting with a mortgage originator, let's tackle the crucial decision of choosing the right one. Not all mortgage originators are created equal, and the nuanced differences can translate into significant savings.

Data from the Home Mortgage Disclosure Act (HMDA) collected by the Consumer Financial Bureau suggests that making the right choice can potentially save you $9,407.

Mortgage Banker:

  • Works for a banking institution or mortgage lender (e.g., Chase, TD, Wells Fargo).

  • May have additional overhead costs, potentially leading to higher pricing for borrowers (office, staff, marketing, salaries, miscellaneous fee's).

  • Is more prone to having financing overlays – additional qualifying restrictions placed by the bank or lender to manage risk. Such as high credit score requirements, lack of leniency on certain guidelines regarding income etc.

Mortgage Broker:

  • Does not work for any specific lender but has access to an infinite number of lenders nationwide that partner with brokers (in many cases same lender as your mortgage banker yet at a lower cost to you).

  • Can shop all lenders in the nation for the best pricing, often making a mortgage broker the most affordable option.

  • Legally capped in what they can charge, preventing the addition of arbitrary fees and rate padding (common occurrence with mortgage retail lendrs/mortgage bankers).

  • More lenders and wholesaler typically gives room for more programs, flexibility and financing on more complex loans along with access to down payment assistance.

Your Best Choice: The Mortgage Broker Advantage

Choosing a mortgage broker becomes a clear decision in light of these differences. A broker's ability to access a broad spectrum of lenders and offer transparent, affordable rates makes them a formidable ally in your home-buying journey. Additionally, they provide access to down payment assistance programs and grants, making them an invaluable resource. Brokers can typically finance borrowers with credit scores as low as 500, recent bankruptcies, flawed credit with lates and deragotries and so much more. The average home purchaser who uses a mortgage broker saves $9457 on their home purchase.

How to Find a Broker?

Simple, click on this link and filter your search by state, once you found 1-3 mortgage brokers in your state find their contact information and get in touch. You're welcome :)

(Scottmans guide top broker search) to locate a local broker committed to delivering the best pricing, rates, and overall experience for you.

Conclusion: Navigating Towards Homeownership

Armed with the right knowledge, you can confidently navigate the mortgage landscape and move closer to homeownership. Remember, the best guide through this process is a skilled broker, providing unparalleled access and expertise.

If this isn't enough and you seek a comprehensive guide to home buying, explore our video masterclass course. Designed to equip you with the knowledge needed to secure your dream home, it includes strategies for accessing down payment assistance, mortgages with a 500 credit score, zero down home buying strategies repairing your credit and more. Click here to start your journey!

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Note from the Author:

Thank you for choosing this guide as your companion in the home-buying process. If you find this information valuable, share your experiences or drop your comments below. Let's continue this journey toward accomplishing the dream of homeownership together.

Connect with me through email at mike@mike-duran.com

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Mike Duran

Mike Duran is an entrepreneur by heart. Starting his career in sales Mike was a real estate salesperson first. With the skills he learned he gained interest in mortgages. Gravitating to becoming a mortgage broker Mike Duran has exceled in all aspects of his business. Now Mike enjoys digital marketing, course creation, building homes and spending time with his family. Mike Duran is originally from Queens, NY and now enjoys life in the country side of Upstate NY in Saratoga County.

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