Should you go through a Mortgage Broker or a Bank for a Mortgage?

Another good question!

First of all, just to be clear on terms: if you’re looking for mortgage services, there is no difference between a mortgage broker and a mortgage agent (see my previous post).

So what’s the difference between getting a mortgage through a mortgage broker versus a bank?

A mortgage broker (or agent) belongs to a brokerage and has access to various lending institutions and their respective mortgage products. A bank, on the other hand, has mortgage specialists who represent them and they have access only to the bank’s own mortgage products. 

For example, if a certain mortgage specialist works at Bank A, they can only offer you the mortgage products from Bank A.

Mortgage agents have more flexibility. They have access to many lenders. They may even have access to the mortgage products at Bank A.

If the mortgage agent thinks a mortgage at Bank A is best for you, they’ll get you that mortgage. If they find a better mortgage from a different lender, they’ll get you that mortgage instead.

A mortgage specialist is tied to the bank and doesn’t have the option of getting you a better product from a different lending institution.

What if you don’t Qualify for a Mortgage with a Bank?

Another difference is that if you don’t qualify for any of the mortgages at Bank A (even if it’s just a temporary situation), the mortgage specialist can’t get you a mortgage. The best the mortgage specialist can do at that point is recommend you see a mortgage agent.

If a mortgage agent finds that you don’t quite qualify for a mortgage at Bank A or any of the big banks, they can go to one of their other lenders to find something for you. 

Sometimes it may temporarily come at the cost of a slightly higher mortgage rate than you hoped for, but the agent will get you a mortgage just to get you through that hump.

And that’s what’s important. 

After some time, maybe even as little as a year, your situation might stabilize and you find you now qualify for a better rate.

At that point, the mortgage agent could move you to a mortgage with the better rate; a rate that you couldn’t qualify for previously. That new mortgage could be with a different lender altogether. But it could even be back with Bank A.

So which is Better? A Mortgage Broker or a Bank?

So, in the end, the biggest difference between a mortgage agent and a bank is options. A mortgage agent simply has more options (as they have access to more mortgage products) than a bank.

The more options you have, the better chance you have of getting a better mortgage. That’s why it’s better to get a mortgage through a mortgage broker than through a bank.

Related Posts:

• Mortgage Broker vs Mortgage Agent: What’s the Difference?
• Should I use a Mortgage Broker? A Question of Size

What’s the Difference Between a Mortgage Broker and a Mortgage Agent?

Good question! The answer is a bit different depending on whether you want a mortgage or you want a career in the mortgage industry.

If you’re looking for someone to broker a mortgage for you, there is no difference between a mortgage broker and a mortgage agent. They perform the same function in that process and have access to the same rates and resources within their brokerages.

If you’re looking for a career within the mortgage industry, then the main differences between a mortgage broker vs a mortgage agent is that a broker can become the chief compliance officer of a brokerage (i.e. the principal broker) and can oversee other agents. A mortgage agent can do neither of those things.

The differences in the roles between the two titles is similar to how any teacher can become the principal of a school as long as they meet certain requirements (e.g. extra education). But the role of a principal is different from a teacher.

Principals are responsible for the whole school, deal less with the kids and more with parents, etc. For many teachers, that type of role does not appeal to them. They enjoy the act of teaching and interacting with kids on a daily basis.

Similarly, in the mortgage industry, many agents have no desire to perform the role of chief compliance officer or to oversee other mortgage agents.

They just like to interact with and get to know their clients. They feel satisfaction in helping their clients get a mortgage to buy a home, or refinance their mortgage to decrease their monthly debt payments, or whatever the case may be.

The responsibilities of a principal broker don’t appeal to them.

Who has more Experience / Knowledge? A Mortgage Broker or Mortgage Agent?

Note that the title of “broker” doesn’t imply greater experience or knowledge compared to an “agent”.

While you have to be a mortgage agent for at least two years before you can become a broker, it’s possible for someone to be a broker with five years of experience in the mortgage industry while an agent in the same brokerage can have 30 years of experience.

On a personal note, I don’t see myself ever becoming a mortgage broker. I just like to help my clients through a process that holds a lot of uncertainty and can be very stressful. That’s all I want to do.

But nothing stays the same forever and who knows? Maybe I’ll change my mind in the future.

Related Posts:

• Mortgage Broker vs Bank for a Mortgage: Which is Better?
• Should I use a Mortgage Broker? A Question of Size