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Any drawbacks to using a mortgage broker recommended by the seller's realtor? First time home buyer

  • July 21 2009 - Washington Heights
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Answers (9)

Depends--was more than one choice given, and have you shopped around yourself--and if so who had the best deal. When I recommend brokers it's because I know the job will be done, fairly, honestly, and as quick as possible and let's not forget because I know they offer good deals and are often comparable to the others if not better. 
  • July 24 2009
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Ask the real estate broker's referred loan broker why you should do business with them. Then ask a few other loan brokers AND mortgage lenders the same question. Choose who you think will serve you best. And if your real estate broker has offended you, unless you signed an "exclusive representation agreement" with them, you can choose to have another Realtor represent you.

There are no real advantages in today's credit markets between lenders and brokers as long as they can accommodate your needs.

(Remember this is the only difference between the two): loan brokers use wholesale lenders to locate a rate of interest for you and lenders use their own money and then sell the loan to correspondent lenders who provide the interest rate the lender can offer you.

Here are a few considerations in your favor:

1.) Ask your real estate broker to negotiate to have the seller pay points to buy down your interest rate (discount points and origination points; and make sure your lender is not receiving a "service release premium", or if you are with a loan broker that they are not receiving "yield spread premium"). You can deduct those from your income (check with your tax specialist).

2.) Ask your prospective lender if they can make you a "bridge loan" to pay any of your "settlement charges" (everything that will be a charge or deposit shown on the "HUD Statement" at closing) that will not be paid by the seller (can be up to 6% of the sales price if you are using an FHA 203b loan). Because you will be receiving a tax credit up to $8,000 as a 1st time home buyer (if you close on your purchase prior to 12-1-2009), you are eligible for the bridge loan (it can not be used for down payment; only settlement charges). You might ask your bank or another small loan company if they will loan you the amount equal to your tax credit; (you can amend last year's tax returns and pay off the loan when you receive the cash from the credit.)

3.) FHA allows you to receive all of your required down payment as a gift (from family, relatives, or friends as applicable).

4.) If you are interested in a home, but it needs a lot of work, the FHA 203k loan program (there are 2 types; streamline and standard) will fund all of the costs of the improvements, renovations, repairs, etc. (up to 96.5% of the value as it would be after completion of the improvements) as well as the purchase. Ask about the FHA "Energy Efficient Mortgage" too. If you can get a bargain because of the condition of the home, this loan program could help you build immediate equity; (FHA will finance a HUD owned home for you with just $100 down payment required). (The Fannie Mae "Homestyle" loan program finances improvements too.)

5.) Ask your lender (or loan broker) about getting you a "2/1 buydown". This can be a great financing tool that the seller can pay for; this reduces your interest rate 2% in year one and 1% in year two from the "note rate" (reducing your payments considerably in the first two years). This is a good strategy if you are expecting an increase in income soon, if you are trying to pay off other higher interest rate debts, or if just want to accumulate savings again.

6.) Ask your real estate broker for the seller to pay a "pro-rated tax credit" toward property taxes due on the property.

7.) If either of you are an EMT, firefighter, law enforcement officer, or a teacher servicing anywhere in the city's "revitalization area", you can get a HUD owned home for 50% of the list price.

There are some other things you might consider depending on your circumstances. Experienced Realtors and Loan Originators that have kept up to date with all of the changes in the credit markets are very capable of helping your get the best advantages in a coordinated manner if they will work together effectively to try and help you!

Choose a good team that cares about you!

Good luck and be well; hope this helps!
  • July 24 2009
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molytgm, this is what I mean by it's none of their business:

 The broker communicated information about our mortgage with the seller that he was unauthorized to do.    Illegal, btw.

Learn from Adelaidez' experience. Once the Broker or Lender you choose preapproves you and gives a letter stating you are preapproved, that is ALL the information the seller and seller's agent should get. You can not find a better lender in NY than Chris, recommended below.
  • July 24 2009
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Definite drawbacks.

I was involved in a purchase last year where I stupidly used the broker and attorney associated with the selling agent. The broker communicated information about our mortgage with the seller that he was unauthorized to do. He actually told the seller that we had an approval when we were never approved. This resulted in the seller threatening to liquidate our downpayment.

The associated lawyer conveniently refused to help me fight this. I had to hire a second attorney who simply wrote a letter to the seller to get my downpayment back.

Somehow I bet they were all in this scheme together.

This time around I knew better, thank goodness.
  • July 23 2009
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Perfect example of bad realtor advice.  Thanks for helping illustrate our point Georgia!


Molly--Ask the realtor to take care of his/her responsibilities (pounding yard sign in front yard and driving around).  Take your time and select a competent loan officer that will take good care of you and cares more about you getting the best loan product available and less about their 3% commision and ask the realtor to mind his/her business.

Good Luck!
  • July 21 2009
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First time home buyers are typically using FHA loans. They only require 3.5% down and are fixed for 30 years. Best rule of thumb go directly to the bank you do your banking with. If you bank with a credit union (they generally only do conventional loans requiring 20% down) ask your REALTOR for a direct lender.
  • July 21 2009
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Agree with the others, the sellers realtor will recommend that Broker for a control issue. It is none of their business how much money you make, what your credit is, where and how long you have worked, etc. Chris can handle your loan and the control freaks.
  • July 21 2009
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Find your own loan agent.  You also get to pick the title company.

It's a jungle out there
  • July 21 2009
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Chris in New York


Drawbacks are feeling forced to work with someone you don't know or trust. 

The whole process will be ten times easier by giving Chris Corcia a call to start the process. He comes with the highest recommendation of lenders in the New York area.
  • July 21 2009
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