When it comes to rates, there is no hard and fast rule about mortgage lenders; instead, the rate they offer you has more to do with your credit score, down payment and loan amount than with the specific lender. A bank can be a good starting point, especially for those who have a good relationship with their own financial institutions. For people who don't want the hassle of contacting different banks, mortgage brokers are a better option. As mentioned above, some lenders work exclusively with mortgage brokers and some brokers work exclusively with specific lenders.
That said, your experience can really vary depending on the person you choose to work with. In this way, they have access to structured lending programs offered by a variety of loan servicers, usually large domestic banks. Unlike a “mortgage broker”, the mortgage company continues to close and finance the loan directly. Because these companies only offer home loans, they can streamline your process much better than a bank.
This is a big advantage, meaning that your loan can be closed faster. In short, mortgage brokers may be a good option if you're looking for a home loan, but you should always compare their rates and services with those of your local bank and credit union to be sure. On the other hand, when you work with a mortgage broker, they may not always be able to influence what happens at the bank, since they don't work for it. Simply accepting the construction lender's rate wouldn't give you a complete idea of what's available.
Conversely, if you know what you're doing and have obtained a mortgage in the past and have a fairly simple loan, online direct-to-consumer mortgage lenders might be the best option, at least in terms of prices. You're likely to see lower rates and rates at credit unions because they transfer savings to their members. In fact, FICO has adjusted its algorithm for this purpose and ignores mortgage inquiries made 30 days before qualification. Mortgage loan originators go through very different processes between federally authorized banks and mortgage companies.
In addition, multiple mortgage inquiries in the same period count as a single inquiry, so it shouldn't affect your rating. However, brokers continue to play an important role in the industry and can be very beneficial to both prospective homeowners and those looking to refinance a mortgage. Mortgage brokers once had a risky reputation, so it's no surprise that many people are still hesitant to use them. While a mortgage broker is a one-stop-shop for multiple options, their fees come from the lender, so well-qualified buyers can get better rates and commissions by eliminating middlemen.
While they often offer great rates to their members, there are times when credit unions simply can't compete with larger banks. This is different from banks, whose sole purpose is usually to generate income for investors, says Bob Dorsa, former president of the United States Credit Union Mortgage Association in Las Vegas. The benefits of credit unions aren't as obvious when looking for mortgage rates, because credit unions don't have the marketing scale that banks do, so they generally don't appear in searches for low rates, says Rich Arzaga, founder and CEO of Cornerstone Wealth Management in San Ramón, California. There are many online mortgage companies and mortgage lenders that pride themselves on doing things remotely, via email, or even via text message.