Using a broker or not? (loan, approved, credit, fees)
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Some of my friends uses bankrate.com to find their mortgages. Some use broker. I wonder how a broker shops for a deal. Are they using the internet to find one too? How much do they normally charge for the fee? What are the benefits of having a loan broker?
Brokers are typically sent rate sheets each morning around 10am from the different lenders they work with. They're not shopping online. A broker typically gets a wholesale rate whereas you get a retail rate going directly to a lender... but some lenders, like B of A, don't allow brokering anymore.
You will generally get a better rate and the process will go smoother when working with a broker. A friend of mine works for BofA, and they have to lock all loans on 90 days as it takes them that long to close a loan. I typically close all my loans well within 30 days.
Most consumers think they can count out the middle man and go directly to the bank. But as Falcon said above, when you call a bank you are offered retail rates but when a broker calls that bank we have access to wholesale rates.
The various online sites are nothing more than lead generation tools. That means they take your info and then make money selling it to other people in the marketing areas of lenders. Once upon a time that was not the case but with the collapse of most lenders that had multiple channels for loan origination the online business changed dramatically.
Secondly most mortage brokers have a greatly reduced number of lenders that they work with, offering far fewer options,and with leeway in the kinds of deals they can assemble. As VB notes, the surviving mortage brokers are still around because they can offer the clients that the work with a streamlined path. Many of the larger banks are still a mess with waves of layoffs and forced mergers resulting in a mishmosh of unrestrained overworked staff. It is not impossible to get good service from such lenders, but the odds do not favor it.
The decision you make should be based on the recommendations you get as to service and value. Folks that shop on both generally can be trusted...
Is it the norm when you first speak w a mortgage broker they ask to run your credit to see what you qualify for? Should fees or anything of that nature be discussed before you hand over your social security number? thanks!
If you are ready to buy or ready. To refi or ready to start determining what you can afford the broker will run a cesspit report and use your SSN for that. Nothing odd there.
Similarly if you are starting out / shopping you ought to ask for a rough estimate of the standard costs. Ideally you have some one that you can get this info from, like a friend in a similar situation that will actually keep their loaned docs and share em with you, but if you ask two or three brokers and they are all in the ballpark odds are good that they re not all lying...
Really you ar not shopping for the lowest fees. It is how they respond to questions about how long this will take, what loan programs they are familiar with, went sort of service they can provide.
Is it the norm when you first speak w a mortgage broker they ask to run your credit to see what you qualify for? Should fees or anything of that nature be discussed before you hand over your social security number? thanks!
Yes, this is norm. Many times, fees are contingent upon what your credit looks like. If you have "not so great" credit, it takes more time, effort, and work to get a loan approved, so you might be charged 1.5 points instead of just 1 point to get the loan done. Many times, if a company that funds their own loans can't do your particular loan because of a credit situation and they have to broker your loan, they'll charge another .25%.
So, yes, they want to see your credit before committing to any comments about fees and such.
The one caution I have is that federal and many/most state laws don't assign a fiduciary duty to mortgage brokers. (ie. mortgage brokers are not legally required to work in the client's best financial interests) And some unethical ones out there will encourage a borrower to take a higher rate/more fees loan than what they actually qualify for because the broker gets a better comission from the lender.
So trust but verify, as they say. Once you get further along in the process, there are a number of ethical brokers on the boards here who will gladly look over the numbers you got from the person you're working with and tell you if you're getting fair numbers from that broker.
The one caution I have is that federal and many/most state laws don't assign a fiduciary duty to mortgage brokers. (ie. mortgage brokers are not legally required to work in the client's best financial interests) And some unethical ones out there will encourage a borrower to take a higher rate/more fees loan than what they actually qualify for because the broker gets a better comission from the lender.
So trust but verify, as they say. Once you get further along in the process, there are a number of ethical brokers on the boards here who will gladly look over the numbers you got from the person you're working with and tell you if you're getting fair numbers from that broker.
Thanks, that's one of my concern.
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First let gets something STRAIGHT...
