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Profile picture for lechtenberg

what are pros and cons of bank vs mortgage lender with 20% down and excellent credit as total fees

assuming we qualify for best conventional loan and can put 10 or 20% down. how different are fees and rates in s fl from bank and from mort broker to mort broker. dont want to pay frontload or pmi on fha. thanks
  • June 24 2009 - Davie
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Answers (10)

Profile picture for FinancialResources
There are several rules for documentation on the GFE regarding brokers or bankers. This may appear confusing but look at it this way.

Every office must incur expenses in the process of working on your loan file.

A mortgage banker is more in control of the loan during the process.A broker prepares the file, then gives to the ultimate lender to approve. This can cause additional delays in the time frame it takes to close a loan.
  • July 04 2009
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Erez, LOs at banks and direct lenders can lower fees and pricing, too.

Are you saying brokers don't need to pay for employees, brick and mortar, and other expenses? 

The best answer is to compare and as Martin said, its not always best to go with the cheapest guy... The LO's IQ, knowledge, and experience is important to weigh, too.
  • July 04 2009
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Profile picture for Erez Cohen
FYI-  I see people placing answers that dispute the fact that a broker can beat a retail banks rate and fees-  If the broker is willing to work on lower fees and less yield they always beat the retail bank, -(especially if they own the firm.)-  Additionally, the retail bank has to pay for employees,brick and mortar, and many other expenses.

As I have indicated before-  Go to your local bank, and then ask a quote from a mortgage broker-  See who comes up better.
  • July 04 2009
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Mortgage Brokers all work out of the same pool so to speak.
You'll just need to do your homework and shop for the best rates.
Ask for GFE's so you can compare rates and fees.

Warmest Regards,

Steph,
FHA Mortgage Specialist
 
  • July 03 2009
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I know this post is a week old but, just in case the poster or any other consumer type reads it, the answer lies between the lines.

Banks are "Direct Lenders" by definition and license. Yet many of them choose to use the exact same business model, and investors, that Brokers have always used. That's interesting.

No offense to anyone is intended, but if "Direct Lender's" need to Broker loans to compete, well you do the math.
  • July 01 2009
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All of the loans end up pretty much in the same pool with a 20% down payment.  With that being known... it will come down to the experience of getting there.  If you want to end up the same place you start... Call WELLS FARGO directly.  If you want to end up at Wells Fargo when the loan closes and is finally sold to its final resting place.. compare WELLS direct with a local Broker or Bank...  Interview all 3... 2 of the 3 are usually below par (mostly uneducated idiots) and weigh the lender related costs with the exact same rate AND their IQ.. This is important because if you select the "chimp" with $50 less in costs but felt he was a moron... you will be right....  Do not do all the undercutters legwork either.. (no offense to anyone here, but I hate that crappy tactic).  Have them play fair and make an educated decision.  Do not use a lender that changes fees for the better like a GM F&I guy trying to sell a 2006 Hummer prior to the dealership being closed.. Can't trust em so why hire them, reward them and pay them.  Finally, try to go more local for 2 reasons if all else is tied.  1) you can get your hands around their neck if they are idiots or you need your hand held for certain reasons  2) The LO will get paid.. spend money at a local grocery store and the circle of life will continue in your area.. Sub out all labor to India and someday there would be no more businesses near you as they are all extras on SLUMDOG Millionaire part deux.  Good luck.
  • July 01 2009
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Erez,

Read the previous post and note you are also offereing bias advice.  Many small local banks can also correspond and broker loans.  If you beat any of my quotes by a "Substantial Amount" you would be out of business pretty quick!
  • July 01 2009
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Profile picture for Erez Cohen
1) If you are putting less than 20% down you will pay mortgage insurance.
2) A mortgage broker will more often than not beat your local bank as they have wholesale investors with better rates.  Go to your local bank and get a quote with all fees.  More often than not a broker will be able to beat the rate by a substantial amount.  The bank feels they have a captured audience.
  • July 01 2009
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Nicholas you are!

No difference...many direct lenders or banks operate on a hybrid model and can look at outside lenders for rates and programs. 

Shop for the individual loan officer not who they work for.
  • June 26 2009
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Profile picture for Key Lock Lending
I would strongly suggest putting 20% down if you have the funds readily available and are looking to get the best rate and the best payment. 

Otherwise if you're going to put less than 20% down go FHA, keep your cash and put 3.5% down instead.  I realize that the 1.75% the FHA adds onto the front of your loan is a relatively high cost of doing business but the monthly mortgage insurance premium that the FHA charges is considerably less than comprable mortgage insurance (pmi) that the private mortgage insurance carriers offer.

The best way to know for sure is to have all of the options on the table so you'll see the tangible variances from program to program. 

Regarding your question about who has lower rates and fees-  It is my opinion that a mortgage broker, particularly one with a large stable of lenders can give you a lower rate and with less associated costs.  Albeit, I might be biased because I work for a broker.

  • June 25 2009
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