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Purchasing a home - is it wise to use a mortage broker or online broker (whom appears to be cheaper)

Met with a mortgage broker yesterday.  Basically, it appears they charge a 1% origination fee which if I shop the loan online I do not have to pay.  But I worry about the service and gettting the loan done ontime to meet the 45 day escrow.  Any advice?
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June 04 2009 - Chino Hills
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Answers (23)

It always depends. What is important to you, service or cost. Since you met with one broker meet another, and a lender. Do some research before you make a final decision. Broker/Loan consultants provide a service that internet sites can't.
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August 11 2009
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Have you considered asking the broker to match the on-line price?
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August 11 2009
look around.. check people rating... let people compete for your business.. a mortgage broker could be as good as a lender... 
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July 21 2009
Not every local broker or banker charges an Origination Fee of 1%.
Is the 1% Origination fee buying you a lower interest rate?

You will need to shop around for a good local broker or mortgage banker.

Remember that during the loan process, you will be needing to talk to your broker almost everyday. Good communication will relieve tons of stress, and expedite your approval.

I'd strongly suggest using a local broker or banker, and taking out the stress. Dealing with a local person who is aware of local conditions, appraisals, title issues, Certificates Of Occupancy etc. is invaluable.

If this is a purchase, and not a refinance, avoid the headaches, and look for a local broker.



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July 21 2009
Those are definitely good questions to ask when looking for a lender. As a loan is a "product" you are always going to pay for it in some factor just like everything else you purchase. Like our parents said "There's no free lunch" and this proves true here. There are many people and steps involved in funding a home loan purchase or any other RE transaction for that matter. If you looking for the free loan you need to rethink that plan and realize that you will not get a quality product and you will not get in the time frame needed. Now you can go with a No Point loan and that will alleviate the up front cost for you(side note: have your realtor ask for a 6K to 10K seller credit be included in your offer and this will cover the closing costs) but then you will end up with a higher interest rate and will pay a ton more in interest over the life of the loan. And the opposite should be true if you're going to pay points but not always the case, beware. You can avoid some of these costs and time delays right up front by skipping the broker and finding a mortgage banker.
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July 20 2009
With a purchase you should go local.  If you felt the broker was too expensive call a few banks or local credit unions.
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July 15 2009
I do not know about Travis but my underwriter is 3 doors down from my office and a lot of borrowers appreciate having someone face to face to walk them through the process especially being a frist time home buyer.  Now more than ever the playing field is pretty level given rates and costs  you just need to talk to more than one person.  Why not support your local economy instead of dealing with someone in a bunker in Kansas
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July 09 2009
Stick with the basics and you will be fine. 
-Lender Cost for the product you are looking for all the other numbers estimates.
-Deal with an institution that is highly regulated such as a Federal Savings Bank and ask the loan officer for references.
- Location of the bank is irrelevant loans are hardly ever approved locally and technology allows us to speak and send documents as though everyone is in the same office.

Good Luck 


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July 09 2009
kandiashcraft, if you are concerned about closing on time don't be.
Wells Fargo offeres an On Time Closing Guarantee, give me a call and work with the leader in the industry.  I'll work on your loan request to ensure you close on time with a respectable interest rate.

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July 08 2009
Your lender is one of the most important elements of you home buying experience.  The agreement you have with your bank will affect your budget and overall buying experience for many years to come.

Brokers have the advantage of having many products from many lenders to choose from.  And though Brokers can offer you rates similar to those offered directly by lending institutions, their upfront fees at closing can amount to much more than just 1 point, depending upon your buying credentials.  
If you are a high risk buyer (lower credit score, short time on your job, high debt) you may need to find your loan with a Broker.
If you have excellent credit, strong job stability, and low debt, you may have your pick of the best rates and lenders. 

In either case, you'll want to  carefully check the Truth in Lending statement and Good Faith Estimate from every lender or broker whose products you consider. Points and fees can vary enormously from lender to lender and broker to broker, and these fees can be much more than just a point!

So how to choose and where to start?  I would start by consulting with my Buyer Agent who knows which Lenders are reputable and stable.  Your agent will be able to give you 2 or 3 or more choices to contact.  Compare their rates and terms "apples to apples" by comparing the APR's for the loans, and then make the best choice for yourself and your future.

and I'll be more than happy to help you find the right home and lender for your lifestyle and budget!

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July 08 2009
As a real estate broker/salesman, I've had extremely bad luck with online lenders.  They promise the world but don't deliver.  Their rates which may seem lower are offset by extra fees and then the ultimate inability to close.
Find a mortgage broker you can trust, they have access to loans from a multitude of reliable lenders.  That's your best bet. 
Don't lose the home you love because of an ineffective lender.
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July 08 2009
Kandia

We are a direct lender, enabling us to close  within 30 days. Banks
are averaging 60 days.  My title friends are saying this is causing 50-70% deals to fall through.

While we are not brokers, I would not look at the 1% as a big issue if the lender can close and offer you a better rate.

You can go to BOA pay no points and have 5.375% 30 year fix
or pay 1% origination through direct lender or broker and get 5.125%

Also be wary, online price advertisements can be very far away from what you actually are offered (rates)

 we do conventional,fha,va purchase and refinance.

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July 08 2009
I would have to say from my latest experience, that every major lender issue in my transactions and 11th hour declines, have been with a brokered loan.
Some bank-owned properties will not except offers from buyers not using a direct lender! 
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July 07 2009
In my professional opinion, I would suggest a local broker with experience in Purchase Loans.

There are many factors and people behind every transaction and I belive it's smoothest to work with people familar with the area and customs when doing a purchase loan.
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June 06 2009
Definitely be learly.  There is no magic money.  All the funding sources are now coming from 3 main companies.

If you watch some of the online ad's or even TV ad's you'll notice.  That they run 2 ad's side by side.  My take is partially in an effort to confuse consumers. 

The one ad is a low rate ad, but it never mentions the cost.
The other ad is a low cost ad, but it never mentions the rate.

By putting them together unfortunately people forget what they didn't see from each ad, and think they would get low rate and low fees.

Another problem is the time it takes to update.  Rates have been extremly volatile lately, so if the information wasn't updated in the last 30 minutes.  Then all you're getting is a quoted rate and not a real rate.
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June 05 2009
I don't agree with Rudi very often....mostly because it gets a rise out of him and I kind of like pushing buttons...but he is dead on on this...NO MAGIC LENDERS, NO MAGIC LOANS and NO MAGIC PRICING..Getting a par rate with the same fees is just not gonna happen.
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June 04 2009
Definitely do your homework.  Cheaper isn't always better.  Find out who is going to be there for you during the process and compare your good faith estimates. 
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June 04 2009
Super conforming at 5.375 is about par (dead cost). No lender or broker is a non-profit orginization. .... Please come back at let us know how many "surprises" you encountered prior to funding. .... Good luck, Rudi
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June 04 2009
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For a conforming jumbo rates are all around 5.375 - closing costs are comparable (escrow, title, appraisal, etc.) - but the broker has this 1% orig fee where if I shop on Aimloan or Targetrate I get the same loan without the orig fee.  Both online lenders give the estimated closing costs. 
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June 04 2009
No Magic Lenders.....If you are getting a competetive quote no way any lender will be able to do the same loan for 1% lower in costs.  That is just not realistic!
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June 04 2009
As Dave says, get estimates and compare the total costs, not what they are called. As for closing a purchase in 45 days, I don't believe you will have an issue with that, most can close purchases in well under 30 days.
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June 04 2009
I'm not a mortgage person so I might be able to answer with some partiality.

If there are no origination fees, I would make sure there are no 'junk' fees the lender puts on after you agree to the deal. The one percent origination fee is how the broker gets paid to do the deal.

I know some Realtors that in the past, were leery when clients used internet lenders because the chance for more errors was so high. But alot has changed in the mortgage business in the last year, so maybe this isn't so much an issue.

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June 04 2009
" appearances" can certianly be deceiving ...one good place to start is to get  full good faith estiamtes from both sources  ( using the exact same parameters..loan amt ..rate desired etc.. ) on tme  exact same day and time ...and then comparing from there
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June 04 2009
 
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