Profile picture for irondude

Is it better to get a mtg. through a broker or go directly to a major bank?

  • July 06 2009 - Cold Spring
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Answers (12)

Like Wayne, I have worked all sides and can say there is no real difference.  I currently work for a direct lender that allows us to broker.  There are some loans the bank would simply rather not have in the portfolio.  In addition with rates at historic lows on 30 year fixed rate loans they don't want to tie up portfolio money on loans that will sit on the books for a long time (that ties up capital).

When push comes to shove the difference is mainly how compensation is disclosed and if that is part of the consumers decision making process then they are focusing on the wrong things.

As far as brokers having the one legged albatrose loan...ultimately that loan is being sent to a direct lender...A broker simply is putting a borrower together with a lender/program.  A Direct lender is simply putting a borrower with a program and sometimes a different lender.

Why folks insist that the difference is significant is beyond me...It is all about spin!

 

 
  • July 07 2009
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Rudi,
Thumbs up to you..ole buddy.
Well said, and all true.

  • July 06 2009
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Like Tiffany, I have worked all sides of the fence.  I can only tell you straight that Any direct lender does Not have to disclose their full income from your loan..............it's a quirk in the disclosure laws created by HUD.

Whereas, a broker must disclose all sources of income.  Brokers also have the advantage of being able to select from a variety of lenders;whereas, a bank will be lending out their own money and then selling to Wall Street after closing.

Talk to a few on both sides.........pick whom you feel the most comfortable with........and close your loan.

Best of Luck.
  • July 06 2009
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Timothy,

Apparently, you have never worked at a Brokerage.

Does Sun Trust have a product for 1 day off MLS? Or cash out after 90 days? How about financing Condos with No Condo Cert? Or just the mid-score of the primary wage earner, not the lowest mid-score of all Borrowers? Unlimited acreage maybe? Pledged Asset loan? How about no reserve requirement? What's your current 30F rate on a 1.25M loan? Over 6.15%? Conforming 30F 30 D over 5%? Turn times over 24 hours?

Brokers have the ability to find the right loan at the right price with the turn times they need from an average of 40 different lenders.

A loan officer at a bank usually isn't allowed to broker out. They must settle and sell what their bank has at the rate of the day and live with the turn times that is available.

The above is the primary difference between Banker and Broker. Unless you also want to consider licensing and continued education which all CADRE Licensed Brokers and Loan Officers are required to obtain. This is not a requirement of Banks or DOC entities.

You could sell shoes yesterday and loans today at a Bank due to no licensing or educational requirements. That's what a good Lobby can do for the public, isn't it?

Got more, but I think enough said. .... Happy funding, Rudi Hofmann 
  • July 06 2009
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Profile picture for Myersteam_1
It is better to get a good faith estimate from several lenders.  Compare banks and mortgage companies.
  • July 06 2009
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Geez Tim.  Try tooting your own horn a little louder would ya?  I think someone in Wasilla, Alaska may not have heard you.....



  • July 06 2009
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I'm curious; just what strange/other options do you brokers have that aren't FHA, VA, USDA, conventional-conforming, conventional- High Balance or Jumbo?

State bond loans perhaps?  Doctor loans? C-P loans, lot loans, bridge loans, Portfolio products?

(note: we, a bank, have everything I just listed)

and if it involves private mortgage insurance, I believe the restrictions on brokers (TPO) is much tighter than on banks.
  • July 06 2009
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It should be noted that with todays environment, there are not that many strange products out there that only brokers can do.  Best advice is to call each and get a feel of how wach one does business/ costs and rates invloved.  In the end you are gonig to find that the person you  are dealing with is much more important then the company he/she works for.
  • July 06 2009
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I have worked in both enviornments and I would say the broker has the ability to provide more options and a better chance to get you the best deal available in the current market. A banker can only offer you their products and their prices. If you fit the small box most banks lend in, then your good to go.......if not, then you need a broker.
  • July 06 2009
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Brokers can typically get you the best rate and programs in most circumstances.  Lately I have refinanced quite a few bankers who work for Wells Fargo and Bank of America.  I was able to provide them a better solution than the bank that they work for.  Another advantage of a broker over a direct lender is they have the ability to look at many different options to get you the very best loan out there.

As a broker we make money by charging origination and also making money on a slightly higher interest rate.  If a broker wants to give you a fair deal he can easily make money and beat a retail bank in most circumstances.  My best rates are over 1/2 lower than the major banks and my underwriting times are as fast as 1-2 days.  It's almost impossible to find a retail lender with those turn times in today's market.

Just like the other replier said it is important for you to feel comfortable with the person you are dealing with whether that person is a broker or they work directly for a bank.  One thing that I find is important for you to do is ask the broker and banker how they are making their money.  I like to make the entire process transparent so that everybody knows what is going on and there are never any surprises.
  • July 06 2009
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I might not be educated on the specifics of mortgaging, but I would recommend the Zillow Mortgage Marketplace.

Fill out the information, while retaining your privacy and confidentiality, and watch the offers from lenders and banks come streaming in (without any of the annoying phonecalls!)
  • July 06 2009
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Profile picture for Chris Corica
More times then not we all have the same products and rates. I would say it is more important the individual you are working with rather then if they are a broker or banker. There are good and bad at both places. I would recommend putting in a loan request, contact the top 2-3 quotes you like the best and then work with the person you feel the most comfortable with. Best of luck!
  • July 06 2009
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