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What's the Best Way to Shop For a Mortgage?

Ask Savvy: Is It Better to Get a Mortgage From a Bank or a Broker?


Dear Savvy,

My fiance and I are just getting into the process of buying our first house. We were just walking around and found an amazing house at an amazing price. Neither of us have gone through the process of getting pre-qualified for a loan so I have a few questions of what would be the best way to go about it. I have heard there are two ways, getting your mortgage through a bank and pay less fees but possibly not get the best rate, or get your mortgage through a broker and possibly get a better rate, but with higher fees. I have a credit score that is pretty high (above national average) so I want to take advantage of that. What do you suggest is the best way to go about this? Would you suggest a credit union?

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Mortgage loans can originate from several types of lenders, such as mortgage brokers, mortgage bankers, banks, credit unions, and savings & loans. The majority of the nations mortgages come from mortgage brokers. They're compensated on commission and will have higher closing fees. Simply ask what the broker's fee will be and make your educated decision on whether paying that fee is worth it if you get a better deal on a loan.

Mortgage bankers refer to an actual bank or loan officers at a bank, and they generally have set fees so there won't be any real surprises in that realm. The fees are consistent, whereas with mortgage brokers the fees can vary from one broker to another.

Shop around as much as you can to find the best deal. I called my BFF who was just approved for a loan on her first place, and she said that your real estate agent would have lender referrals to get you started and give you some direction. Homeowners, what were your experiences in shopping for a mortgage?

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