According to Statista, the total number of homes sold in the U.S. in 2020 is projected to be 6.12 million. This number is an increase from 5.96 million in 2018 and a projected 6 million in 2019.
With the steady increase in home sales comes the need for mortgage loan origination. And where will consumers turn when in the broker versus banker dilemma?
The decision will lie solely on the buyer, but with the changes to our current buying climate, the swing is certainly headed in the direction of the broker.
Broker versus Banker: What’s the difference?
Traditionally, those seeking loans would look to banks and their employees to find paths to home ownership. Local banks would thrive off of the business as they held personal relationships with looking people looking to have loans originated.
As technologies have advanced and credit scores have taken greater effect on which borrowers may or may not be approved, the broker versus banker trend has begun to slowly push its way to the broker side of the market.
What caused the change?
Simply put: brokers seek to save money for the consumer while bankers have a vision to make more money for the bank.
As potential homeowners have started to become more aware of their options and the amount of money brokers can save them over the course of their loan, the momentum began to swing.
Which is right for you?
In the ‘70s, ‘80s, and even into the ‘90s, banks were thought of as the only place to go when needing a loan. This was mainly due to the capital held by such establishments and the lack of other options.
The implementation of the internet changed this and allowed for previously unavailable options to become available and widespread.
Now, bankers have the limitations. They are stuck needing to make additional money for the establishments that still need to pay overhead costs and remain within specific regulations.
Brokers, on the other hand, have more flexibility with what they are able to do. They don’t have limitations given to them by advisors and board members. This holds true most importantly with regard to credit scores, where bankers stick to strict limitations while brokers have the flexibility to search for unconventional funding.
When it comes to securing a mortgage, the banker versus broker debate is fairly simple in today’s lending climate:
If you have a single source of income, great credit score, and need your loan in a hurry, a banker might be a decent option.
However, if you have multiple sources of income, credit blemishes, or a debt-to-income ratio outside of a bank’s liking, a broker will know how to adapt and adjust your approach to lending accordingly.
Broker versus banker for the future
Digital strategies continue to change the way we view consumer transactions and the lending industry is no different. Individuals are realizing they have a multitude of options at their disposal and are ready to implement whatever strategy will benefit them.
We see no signs of the advancements in technologies slowing down and are excited for what our industry has in store for both the broker and the buyer.