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  • Brokers Versus Banks

    Author: Michael Campagna Date: April 1, 2015

    By and large, the same theme dictates my ear all day and every day: rate. The first question asked of me is, "what is your best 5 year fixed rate?”; or, I am told, "my bank can give me this rate can you beat it?”95% of mortgage financing is in the form of a 5 year fixed rate and so herein lies the question that is continuously fought, debated and spoken of: What is better, a Mortgage Broker or the bank?


    First, it is important to clarify what is meant by bank and what is meant by broker because there are a million bankers and there are a million brokers in this world. The words ‘bank’ and ‘broker’ are often used in a generalized context when spoken about in loose conversation. In the context of this read, the word bank is referring to an individual lending institution, while broker is referring to an individual whom arranges financing.

    In my opinion, mortgage financing does not start with rate and does not end with rate, so when asked about broker versus bank, I believe that the main difference between the two is variety.


    Greater Product Selection


    An individual institution has only one line of products that can only be offered, whereas a mortgage broker has multiple lenders all whom have different products. So, with this in mind, when dealing with a broker a person has options that are far greater than dealing with the bank.


    Greater Chance of Approval


    An individual institution has only one set of rules and regulations that produce a yes or no whereas a broker works with multiple lenders, all whom have different rules and regulations. This enhances the probability of an approval and in most cases increases the amount one can be approved/ pre-approved for. As well, a good Mortgage Broker knows the in’s and the outs of the industry and can determine which lender would be best fit for your particular situation.


    Greater Accountability


    An individual banks has thousands of employees working under the network whereas a broker is one individual person. This is very useful because if there is something wrong with what has been offered/ accepted by the client, then the individual broker is on the hook and must answer for any error or grief. An institution is accountable as a whole, so if and when conflict of grief arise, there is plenty of red tape a person must endure because the level of bureaucracy.


    Personalized Service & Greater Knowledge


    To be honest personalized service and greater knowledge, are tough to justify but still must be referenced. It is tough to justify these ideas as there are brokers and bankers who could be considered equally talented in these areas. For this reason, it would be difficult to determine which type of lender would provide clients with the highest level of service or product knowledge.


    Conclusion


    I am not discounting the idea that the pendulum swings both ways.  If a consumer is looking for variety, flexibility, and competitive advantage, while maximizing all possible avenues - I would advise they use a broker. On the other hand, if a person would like limitation or a conservative pre-approval process, it seems fitting they instead use the services of a bank.

    The intent here is not to inflate brokers and deflate banks but is instead an attempt to communicate the information in the clearest terms possible. From my experience, the aforementioned items are generally the deciding factors that push a client in one direction or the other.

    Mortgages Financing Mortgage Broker Lending Banks

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Author : Michael Campagna
Michael Campagna has been in the mortgage business for about 6 years. Throughout these years Michael has been associated with thousands of mortgage transactions. Through this experience Michael has developed a natural intuition that has allowed him to understand a person’s wants and needs. His approach is a little different compared to others. Michael does not assume. He lives by the code: collect, organize, execute. Through this process Michael breaks down the mortgage process outlining the mechanics behind a mortgage and the elements that come along with a mortgage. This analysis allows the client to gain an understand of the numerical value and logical value behind mortgage finance. This allows Michael’s clients to be fully aware of exactly what is been offered and eliminates the red tape that comes along with uncertainty. Thus, comes Mortgage Made Simple.. Micheal’s dedication to the over all mortgage process is able to be defined is the mandate as this is his creation.