Difference Between Mortgage Broker and Bank in NYC (2019) Hauseit®

Difference Between Mortgage Broker and Bank in NYC (2019) Hauseit®. Shopping for a mortgage?

Difference Between Mortgage Broker and Bank in NYC (2019) Hauseit® video duration 2 Minute(s) 50 Second(s), published by Hauseit on 21 11 2018 - 21:56:50.

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The difference between a mortgage broker and bank is that a mortgage broker is not directly lending any money for a mortgage and is simply originating and brokering a loan. In other words, a mortgage broker is a middleman that does not have any skin in the game.

This is in contrast to a mortgage banker who will typically be representing a traditional bank lender like a JPMorgan Chase or Capital One. A bank lender will typically put up its own capital to fund a mortgage, unlike a mortgage broker who is simply shopping a loan among the community of mortgage lenders.

Mortgage brokers are typically paid either by the borrower through a premium, or by the bank lender. Mortgage brokers can be paid over 2% of the loan balances they originate, though these days the payout has decreased to around 1% or less due to higher competition from direct lenders.

It is especially tough for mortgage brokers to do business in a market like New York City where big banks have such a strong presence. It is too easy for most consumers to ask their personal banker about buying a home in NYC, at which point they will be directly referred to the bank’s mortgage lending division.

What Are the Advantages of a Mortgage Broker?

Even though a mortgage broker can appear to be an unnecessary middleman, there can be benefits to using a mortgage broker especially in suburban America where big banks do not have a strong physical presence. In that case, it may be easier for a consumer to enlist the help of a mortgage broker to shop around for the best option.

This may be especially true for first time home buyers who have no idea which banks are competitive in their area. Combined with the possibility that there may simply not be enough bank branches to just walk into, it may be simply to have a mortgage broker check with all of the banks for the best rate.

What are the Advantages of a Mortgage Banker?

The difference between mortgage broker and bank is skewed in favor of direct bank lenders in densely populated urban centers like New York City. That’s because NYC consumers typically have their checking or savings accounts already held at a big bank like Bank of America or Citibank, all of which have a strong physical branch presence in NYC.

Furthermore, most mortgage loan shoppers in New York City are sophisticated enough to know that they may be able to get a better rate directly with a mortgage lender. Most NYC home buyers and owners are also familiar with the names of big banks who will typically be more competitive on rates.

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