What Is Better Mortgage Brokers Or Banks When Refinancing Home Mortgage

There are a number of reasons why many are seeking to refinance their homes

. The recent interest rate activity has left many home owners wonder whether to lock the rates by refinancing home mortgage. Therefore to make the most of the current market condition it is said to be one of the best times to consider refinancing home mortgage. Refinancing basically means replacing the current mortgage with the new loan which is at a favorable rate and terms that are easy to manage. Therefore, refinancing is restructuring of your mortgage. But which is a better channel when considering refi?

There are many channels to refinance a mortgage but lets focus on two most common channels; mortgage brokers and banks. Mortgage brokers work as middlemen between the bank/lenders and the borrowers, basically on the wholesale end to secure financing for homeowners. And on the other hand banks/lenders work directly with the homeowner to provide financing at the retail level. From an individuals point of view, there may appear to be no difference between the mortgage brokers and banks, as both explain what the different ways of refinancing are and help to find a best match option according to ones situation. Both help with the paperwork and in making an application. But the main difference is what happens behind the scene.

To understand better lets contrast between mortgage brokers and banks.

Mortgage brokers do not represent any particular financial institution; therefore they act as your representative when you are shopping for refi home loan. Mortgage brokers work solely on commission and they do not get paid anything if the loan does not close. It is in their best interest to get your loan approved and to secure terms that are beneficial and affordable to you. Second, many mortgage brokers will be able to use the relationships that they have built with lenders over the years to negotiate better rates and mortgage loan terms than an individual would be able to find on his own, thereby helping you to save money both on interest rates and other costs that may be associated with your mortgage. Third, your refinanced loan may be with the same bank or mortgage lender that the broker connected you with when the original mortgage loan was taken out, or they may be able to find you a better deal elsewhere without you having to do all of the legwork of checking with all the lenders.

In case of a bank, the loan officer's employer, the bank, decides whether to underwrite the home loans and at what rate and terms which means there is a direct association. Banks can be more trustworthy and accountable in case of any changes in the financial atmosphere. The bank usually has the ability to add mortgage to the existing banking profile and make automatic payments from existing accounts which can be very convenient to the borrowers.Therefore, it is advisable that you compare different mortgage brokers and banks to get the best deal possible on your mortgage loan or refinance. Find and compare the average interest rates offered by several brokers and banks that they might be able to get for you. This will help you to find the mortgage broker that has the right connections to get you a great deal on your mortgage loan refi. But beware of lenders demanding more fees at closing than originally estimated, over-appraising a home to increase the amount of the loan, and indulging in other deceptive practices.

by: Ask Bill

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