Mortgage Myth 6: Your Bank: Is It the Best Mortgage Option

It’s a simple enough assumption: Your bank should be the lender of your mortgage, right?

Perhaps yes, and perhaps no.

Going to their bank is often the first step borrowers make on the path to home buying.

But as Aksarben Mortgage’s Nick Zwiebel and John Major point out in this week’s mortgage myth and facts blog, it’s wise to look at financing options other lenders can offer.

FACT OR MYTH: Where you bank will always be your best mortgage option. MYTH!

Most borrowers naturally gravitate toward their bank when seeking financing to finance a home purchase. This isn’t a bad idea...IF it is one of several options.

Consider this: Buying a home is one of the largest expenditures you can make. Mortgage rates on conventional, 30-year fixed-rate mortgages can vary by more than half a percentage point. It may not seem like a significant number, but given the amount of money and the length of time of the loan, half a percentage point can yield substantial savings.

So how do you know which route to take? Your financial circumstances will dictate whether you go with a bank – yours or another institution – or a mortgage broker.

Bank Pros and Cons

Pros:

You may be able to capitalize on your relationship with your bank as many institutions offer existing customers benefits.
Securing a home loan through your bank could net you special savings on other services, like checking and saving accounts and credit cards.
You can save time and money if you are seeking a straightforward loan or your credit and financial profile match the type of mortgage you want.

Cons:

Often have stricter lending standards than mortgage brokers
Have less expertise in mortgage loans compared to mortgage brokers, given that banks offer a variety of services
Lack loan program variety and are not obligated to tell you about mortgage options they do not offer.

Mortgage Brokerages Pros and Cons

Pros:

Have greater expertise in mortgage loans compared to banks and can leverage this expertise to shop around for best rates, saving you both time and money
Have special access to the options provided by wholesalers, potentially providing customized loans.
Easier to negotiate prices with as they set their own profit margins

Cons:

Can sell your loan to a different lender after you close
May not have a physical location in your city
Some lenders do not work with mortgage brokerages

Bottom Line: It’s wise to consider all your options–banks, mortgage brokerages and companies– when looking for home financing. Aksarben Mortgage will do the shopping for you to secure the overall best deal and service. Connect with us today to put you that much closer to experiencing your good life of homeownership.

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.