Brokers vs. Banks

Choice of mortgage loan programs and interest rates

Want the best option for YOU in a mortgage? Consider a broker instead of a bank.

You may be unaware of the difference between getting your loan through a mortgage broker and getting one through a bank or credit union. Since we feel the differences are significant, we would like to tell you about a couple of them.

Banks and credit unions are mortgage lenders that employ loan officers who originate their loans. They offer only the mortgage loan programs their respective bank or credit union offers. In contrast, a mortgage broker does not represent any one financial institution, but instead is a borrower’s representative having numerous lending sources, which translates into a mortgage broker being able to offer dozens more loan programs to choose from for you.

A mortgage brokerby scouting these many programs—can provide you the best possible loan out of these many available loan programs. Best, in this context equates to best note interest rate and best mortgage type—meaning being able to find a mortgage that allows for such things as lower credit scores, higher debt-to-income ratios, and higher loan-to-property values. These factors can make the difference between receiving a loan and being denied a loan. Additionally, Command Home Mortgage is able to offer home buyers valuable IRS tax credits.

Loan Originator State and Federal License Requirements

There is a federally mandated system called the Nationwide Mortgage License System (NMLS), which requires participation by all persons and companies originating residential mortgage loans in the United States. Persons originating loans for banks and credit unions need only be registered with the NMLS, whereas, mortgage brokers must be licensed, meaning they must:

  • Be licensed in each state where they originate loans.
  • Be fingerprinted and submit to a FBI background check.
  • Pass both a demanding state and federal test.
  • Carry both a surety bond and errors and omissions insurance.
  • Receive ten hours of continuing education each year.

This list illustrates the difference between a registered mortgage originator and a licensed mortgage originator—a much more rigorous set of requirements that calls for both initial education and ongoing education. These are critical points when you are making the choice between representatives for acquiring a mortgage.