Purchasing a home comes with many big decisions. One of these is deciding whether to use a broker or go straight to a loan officer for your mortgage. While either of these choices will get you in your home eventually, the journey to signing those mortgage papers can look very different. In this week’s article, we are going to explore the unique characteristics of these two positions and the facts you need to consider before making your choice between them.
Put simply, a loan officer is a person who works for a bank or other lending financial institution. They are responsible for arranging all the details of your mortgage. Their position requires that they secure a loan that is in the best interests of you, the applicant, and their institution of employment. A mortgage broker does not work for a single lender. Their job is to find a lender and product that best fits your needs.
Mortgage products are unique from other types of loans or lines of credit. The addition of real estate as collateral gives them an extra layer of complexity. Loan officers are not required by law to have any specialized training or certification when it comes to mortgages. Brokers, on the other hand, are regulated in Alberta and must obtain a mortgage broker license from the Real Estate Council of Alberta in order to practice in the province.
Array of Products
A loan officer is expected to maintain a comprehensive knowledge of the products provided by their employer. Mortgage brokers build relationships with multiple lenders, from the big banks to insurance and trust companies. These relationships often allow them access to a better rate than if you just walked in and applied for a mortgage on your own. This large repertoire also gives you a wide variety of products to choose from, depending on your credit score or any other important considerations.
Cost of Services
Typically the lending institution will pay both a loan officer and a mortgage broker for their services. That being said, there are other costs which should be taken into account. The main cost is the money and time it takes to submit applications. Each time you submit directly to a lender through a loan officer, you will need to pay a fee and fill out a form with all the applicable paperwork. If you get rejected, you’ll have to start all over again. By choosing to work with a mortgage broker, you will send them a single application to distribute as needed.
There are several factors to consider when choosing who will be on your mortgage team. Homebuyers who already have a relationship with a particular lender may benefit from the quick in-and-out nature of a loan officer. However, homebuyers who want a wide array of choices to suit their unique needs, access to lower rates, and no time to be pouring over applications, should seriously consider working with a mortgage broker. If you are a homebuyer in Central Alberta who wants to take advantage of our broker services, contact us today to get started!