Minnesota State Real Estate Practice Test

In helping a buyer select a lender, which of the following would NOT be a reason for recommending a mortgage banker instead of a mortgage broker?

1. More variety of loan programs available

2. Lower interest rates compared to brokers

3. Potential for faster loan processing

4. Direct access to underwriting decisions

The correct answer is: Lower interest rates compared to brokers

Recommending a mortgage banker instead of a mortgage broker can involve several considerations based on the specific benefits that each type of lender offers. When considering the options, it's essential to recognize that mortgage bankers typically lend their own money and have direct control over the loan process, which enables them to provide advantages like faster loan processing and direct access to underwriting decisions. These factors contribute to a streamlined experience for the buyer, which can be very appealing when they desire a quick financing solution. The variety of loan programs is often greater with mortgage brokers because they can offer products from multiple lenders, allowing for a more comprehensive selection suited to the buyer’s needs. In contrast, mortgage bankers may have a limited selection as they primarily offer their own products. While mortgage bankers may sometimes offer competitive interest rates, there is no guarantee they will always be lower than those that brokers can access. Since brokers work with multiple lenders, they have the ability to shop around for the best rates, which might result in more favorable terms for the buyer. Thus, the choice to recommend a mortgage banker typically hinges on aspects such as quicker processing times and direct access to underwriting, rather than on consistently lower interest rates.