bank versus broker? (loan, interest rate, credit, fees)

[buffalobelly]

I haven't gone through the mortgage process in quite a while. Anyone have recommendations on whether I should use a mortgage broker or a bank (or credit union)? I remember in the past hearing that brokers had too many fees and that I could save money with a bank. Is that true? Any thoughts on this? (By the way, I'm looking for a 15- or 30-year conventional loan)

Thanks!

[chet everett]

Originally Posted by buffalobelly

I haven't gone through the mortgage process in quite a while. Anyone have recommendations on whether I should use a mortgage broker or a bank (or credit union)? I remember in the past hearing that brokers had too many fees and that I could save money with a bank. Is that true? Any thoughts on this? (By the way, I'm looking for a 15- or 30-year conventional loan)

Thanks!

Seriously bad rule of thumb -- the fact is that you can and should shop at least three different sources of mortgages. If you have a credit union or small local lender I would start there, I would talk with mortgage broker and I would probably talk to a larger bank as well. The fees of each should be very close, and the ultimate cost of the loan will depend on what the rates and costs all total up to. In my experience a honest shopping experience will turn up the trustworthy loan originators. You want someone that will communicate to you in a timely manner and not bs you. Sadly the marketing baloney that is common too often makes it seem like some lender is trying to give a "great deal" they same way that a used car salesperson "loses money selling this car"...

There has been a lot less activity from the major banks using brokers for a wholesale channel, but this is because the volume of loans has fallen dramatically and the lenders have to keep their in house staff working and there is NO pricing advantage to doing this.

The lending sources that the brokers are now using are frankly VERY low cost providers of mortgage money and can compete very well with banks.

[Ceece]

I personally prefer doing business with my local bank. I've had several mortgages with them over the last 30 years, their rates are competitive, and they do no cost refinancing which I have taken advantage of many, many times.

However, my friend just refinanced using a broker. There was some costs involved, a few thousand, but she was very pleased with the process and got a rate lower than I can get with my bank.

[VictorBurek]

Originally Posted by Ceece

I personally prefer doing business with my local bank. I've had several mortgages with them over the last 30 years, their rates are competitive, and they do no cost refinancing which I have taken advantage of many, many times.

However, my friend just refinanced using a broker. There was some costs involved, a few thousand, but she was very pleased with the process and got a rate lower than I can get with my bank.

Anybody can do a no cost refinance. It is not just limited to your local bank.

By the way, each time you did a no cost loan, there were costs. You just didnt pay them the local bank did. How they paid them was they gave you a higher interest rate than what is available. With the additional money they earn selling your loan at the higher rate, they pay your costs and keep the profit. So, you have never really done a no cost loan, you just didnt pay the upfront fees rather you paid a higher interest rate each and every month for the life of your loan. This is why your friend got a better deal.

No cost refi's are good options for many people, especially if you are not keeping the home for a long time. If you are keeping the home for many years, a no cost refi is not a good deal. You will end up paying much more in the long run with a higher rate, than if you paid the costs up front.