Mortgage Broker Vs. Bank Vs. Online Bank – Different Options For Obtaining A Mortgage

Selecting where you are going to get your mortgage is a decision you will likely have to live with for the next 30 years, so it is critical to make the best choice for your situation. Whether the mortgage is for a new purchase or are finance of an existing mortgage, you have three major options to turn to. Consider the pros and cons of each option as you make your decision.

Mortgage Broker

A broker is an individual who works with several different lenders, which may include banks, credit unions, online banks, and other types of lenders. Depending on the broker, he may work with a few select lenders or be more picky about the ones he uses.

The major advantage of using a broker is that you don’t have to do the legwork of comparing rates and choosing the best lender. The broker takes care of all of this on your behalf, and because of this, can be a valuable resource if this is your first time buying a home.

Brokers do have to get paid, so the main drawback of using one is that you may pay a little more than you would have if you had just gone directly through the lender you end up using. In addition, some brokers don’t even direct you to the best loan or lender, but to the one that will earn them the most.


Choosing a large, established bank for your mortgage can be a wise decision if you want an experience focused on customer service. These banks write hundreds of thousands of mortgages per year and have streamlined all of their processes. In addition, you may get some financial perks if you do your banking at the place where you get your mortgage.

The main disadvantage of getting a mortgage at a bank is that you may not get the best interest rates. Because they have the big name and strong reputation on their side, banks can charge a little bit more on interest than other lenders, like online banks.

Online Bank

If you use any large website to compare interest rate quotes on mortgages, you’ll discover quickly that many of the lowest rates are through online banks. These have lower overhead costs because they don’t have brick and mortar buildings, so they can pass along the savings to you.

The main disadvantage of using an online bank is that it’s a riskier process because the bank doesn’t have as strong of a reputation. Particularly if you are pushing for a closing date on your mortgage, you don’t want to risk potential delays. However, if you’re just doing a refinance and timing isn’t as much of an issue, an online bank may be a better choice.

The Bottom Line

Each option has its pros and cons, so consider the costs and benefits of all of them before moving ahead with your mortgage.

Bryan Grayson writes about homes, refinancing, and more.

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