Mortgage brokers vs Banks

Which is better? Both will tell you that they're the best and that borrowers should use them. So who to believe?

Before we go to the differences, let's look at the the things that are alike...

1.) Both have a variety of loans available to borrowers.
2.) Both offer comparable interest rates (if you shop around).
3.) Both have the ability to help people buy homes.

Now on to the differences...

1.) Loan officers get a set salary, mortgage brokers get paid a fee for each loan that closes.

Some people might perceive this as a point in the banks favor saying that banks aren't just pushing anything through to get paid. True, but they also have no motivation to get good loans through either.

2.) Banks can only offer you what they have, brokers can shop around for the best deal for you.

3.) Banks go "by the book", brokers go "however they lawfully can". In other words, a bank deal can go south for the smallest glitch while a broker will generally work a whole lot harder to figure out how to make it work.

4.) If your mortgage broker does a great job taking care of you, you will (hopefully) recommend them to people you know and therefor bring more business (and money) to that person.

The bank employed loan officer can have the best (or worst) service ever and except for missing out on bonuses, it doesn't really affect their paycheck. Their base salary stays the same.

I think a lot of people are so conditioned to using banks that they don't even think about using a mortgage broker and that's really too bad. At the end of the day, the banker works for the bank and therefore has the banks best interests in mind. The mortgage broker works for the borrower and has their best interest in mind.

For my money, I'm betting on the brokers.