Who Should I Use for My Real Estate Loan – A Mortgage Broker or a Bank?

The decision to buy a home should never be taken lightly. If home ownership is in your future, however, the time to prepare is now. Before perusing through listings of homes for sale in Alexandria VA take time to contemplate on how to finance this venture. Two of your main options are your local bank and a mortgage broker. By learning more about how these entities operate, you can decide which would be best for you.

Banks

Banks are a good place to start when seeking financing to buy a home. If you have accounts in a specific bank, you could approach your banker about a home loan. Local banks generally have a criterion for lending money which borrowers are expected to meet in order to qualify for a loan. By checking out the financial qualifications for a bank loan before applying, you can see if you’re a good candidate.

Some of the most important aspects banks look for in prospective home buyers are credit score, debt to income ratio, savings and funds set aside for down payment. If you can prove that you are in good financial standing and have excellent credit, you’re more apt to get approved for a bank loan.

If your credit score is low, however, and you have debts to pay, you may have a harder time getting a bank loan approved. Even if there are homes for sale in the Alexandria VA area within your financial means, your bank may be unwilling to take the risk of approving a loan due to your not meeting their financial specifications.

Timing is yet another disadvantage of working with a local bank. Sometimes it takes weeks for your application to go through the loan process, only to be rejected at the last minute due to some technicality in your financial records. Unless you are in extremely good financial standing, there’s always the risk of your loan being denied.

Mortgage Broker

If you have less than perfect finances, you may find it easier to work through a mortgage broker to get the home loan you need. Mortgage brokers work with various lenders simultaneously, which increases your chances of being accepted for financing. A good broker will have a network of lenders to work with and can help you find the right bank or mortgage company suited to your financial situation. He’ll also manage your loan transaction, making sure you get the best deal on interest rates and terms.

Like all service personnel, mortgage brokers work for a designated fee. A good broker will be up front concerning his services, method of payment and fees. This information should be clearly stated in a written contract to avoid misunderstandings when the transaction is completed. By hiring a licensed broker that’s well-known in the local community, you can have greater confidence of getting the professional services you need.

Knowing what to expect from your local bank and an independent mortgage broker can help you decide who to work with when applying for real estate financing.