When you are applying for a mortgage, you can either work with a mortgage broker, or with a direct lender or bank.
Banks and direct lenders originate loans, whereas a mortgage broker is a third party that works with a network of lenders.
If you are not sure whether to choose a broker or lender, it helps to take a look at the numbers. Data shows that mortgage brokers save homebuyers money and make the approval process more successful compared to mortgage lenders. Let’s check it out.
- Save an Average of $10,662. Poly Research partnered with Willow Canyon Advisors and United Wholesale Mortgage (UWM) to study 2023 HMDA data. They discovered that on average, homebuyers who went through mortgage brokers rather than direct lenders saved an average of $10,662. The number turned out to be even higher for homebuyers who took out VA loans backed by the US Department of Veterans Affairs. These customers saved an average of $13,432. These savings were the result of lower mortgage rates as well as lower fees. So, if you want to save money on your mortgage, a broker is the way to go.
- More Successful Approvals. Another reason to choose a mortgage broker instead of a direct lender is because they can provide a higher approval rate. Here is some data that demonstrates this advantage of mortgage brokers.
- Research shows that mortgage brokers were able to grant mortgage approval to minority borrowers 70% of the time. That is significantly higher than the 58% approval rate for minority borrowers among direct lenders.
- Mortgage brokers were able to grant mortgage approval to non-minority borrowers 75% of the time. For direct lenders, the approval rate for non-minority borrowers was just 64%.
Where a direct lender might turn you down, there is a chance that a broker can approve you for a loan. For borrowers without perfect credit scores, those who are self-employed, or those who cannot afford a large down payment, a broker can be especially helpful.
Some Additional Reasons to Choose a Mortgage Broker
The savings and approval rates for mortgage brokers as compared to direct lenders are both reasons to consider working with a mortgage broker. But a broker can offer you some other benefits as well.
Working with a large network of lenders means that a mortgage broker can bring you a wider variety of loan products than a direct lender can.
A mortgage broker also can offer you a more personalized mortgage process, spending as much time with you as needed to work through obstacles and bring you solutions. Contrast that with the big banks, which usually just turn away customers who are facing obstacles.
Buy a Home or Refinance Now
As an experienced mortgage broker, we can help you save money when you buy a home or refinance in Missouri or 40 other states. To get started, give us a call at (816) 631-9687.
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