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Old 10-08-2010, 02:17 PM
 
153 posts, read 603,753 times
Reputation: 84

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Is it bette rto negotiate a mortgage and do all of the calling and shopping around myself, or should I use a broker in my area? What does it cost me to use a broker? or do they get a kick back from the bank itself? I am purchasing my first home soon (well once I find a house i want). I am trying to get prepared and be as informed as possible first.
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Old 10-09-2010, 04:33 AM
 
Location: Wake Forest, NC
835 posts, read 3,737,093 times
Reputation: 648
Couple of things in play here and I will qualify that I work for a broker.

1- I have access to lenders you do not for one of 2 reasons. Either they don't have a retail prescense in your area or the don't do retail at all.

2- With wholesale rates it is very rare(usually only on a niche product) if ever that a client goes directly to a Bof A , Wells Fargo, Suntrust and I can't do better with the same lenders rates.

3- I am an individual who you will work with you from beginning to end, you will not be a file number in a call center halfway across the country or the world. I am not only trying to get you the loan you want at the best terms you qualify for but I also want to earn your referral by doing everything I can to insure a smooth and stress free process.

Brokers are paid 1 of 2 ways, either by you or the lender, clients choice. Here is how it generally works:
30 year fixed loan:
3.875% with 3rd party closing costs + .75% origination/point/ broker fee.
4.125% with 3rd party clsoing costs + no origination/point/ broker fee.
4.375% with no 3rd party or no origination/point/ broker fee.

Any decent loan officer will give you all 3 choices and offer a suggestion on which is the best structure for you individually, but ultimately it is up to you the client on which to choose.
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Old 10-09-2010, 06:00 AM
 
Location: MID ATLANTIC
8,142 posts, read 19,999,760 times
Reputation: 9382
And, I'll give you the pro's from the mortgage banker side, as I am a mortgage banker.

Like the broker, I have access to money from other banks that you may not have access to, but there is one distinct difference - the broker depends on that source of the money to approve your loan application and also to close your loan. Your file phyically or electronically must travel to that (investor) lender for both of these events.

A mortgage banker sells your loan after you close. We underwrite and close your file on our premises and then deliver your loan to the investor post closing. I am a retail loan officer, meaning that is my sole function, originating loans and seeing your file the thru to closing. If we see that your loan will not be accepted by one investor, we have the flexibility to move your loan over to another investor. We also have the ability to take your loan directly to Fannie Mae to avoid any investor overlays. We also have the capability to broker (turn the file over to the investor for underwriting and closing), but we tend to not like to turn over control unless it is our only choice.

As far as compensation, we probably make much less than a broker per loan closing, but we do not have the overhead the broker has, either. As a mortgage banker, my company offers healthcare, 401, and other standard company perks. Brokers, in most cases, may not have access to these benefits (at this time - Obamacare will change that).

The one trend we are seeing are the larger banks are closing their doors to brokers, such as Bank of America this past week closed their doors to brokers with little notice. This was just one bank of several others in the past to roll up the welcome mat to brokers. However, these banks are still keeping their correspondent (mortgage banker) channels open. The banks blame quality control, too many different brokers, with emphasis on the word "control" as their reason. I find the trend alarming because when you eliminate competition, you eliminate competitive pricing.

Anyone that originates loans should give you different scenarios to consider. I think you will do fine as long as long as your questions are answered to your satisfaction. Let's face it, our industry has been decimated and the only ones standing are the ones that are here for the long haul. Chances are anyone you run across has been in mortgage loans for many years. (There is one exception: the bank loan officer that also sells CDs, checking, and handles your overdrawn account). Do ask the loan officer about their experience. Those of us in the trenches are proud to tell you how long we have been doing this. But what's really sad are the number of people that actually ask the question. This is probably the most expensive investment you will make (at this point in your life). Treat it as such!
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Old 10-09-2010, 08:59 AM
 
Location: West Orange, NJ
12,545 posts, read 19,312,523 times
Reputation: 3706
use both! i spoke to brokers and to someone from Bank of America (now with PNC) who was my brother-in-law's friend - since he was no hassle and waived all the fees he could, i went with him. He beat the broker's rates by a 1/8 point.

not i'm refinancing, and bank of america can't beat the broker. also, the guy who is at PNC also can't beat the broker. He told me he does referral business with a broker and checked with him, and confirmed that the brokers have access to a couple banks right now that have really low rates for refinancing.

long story short - research both and choose the best rate you find (considering costs of course!).
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Old 10-10-2010, 06:59 AM
 
153 posts, read 603,753 times
Reputation: 84
Ok i think I want to try a mortgage broker.. but how do i find one in my area? And how do i know if they are good?
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Old 10-11-2010, 06:15 AM
 
Location: Plano, Texas
1,675 posts, read 6,615,893 times
Reputation: 693
Ask your friends, neighbors, co-workers, etc. for a referral.
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