I am often asked two questions when speaking with borrowers “why should I use your company for my new mortgage” and “Don’t you think my bank will do a better job than you?” Well let’s start with the second question first and simply put, No your bank will not do better than a Mortgage Broker. The reason to use any Mortgage Broker, simply put, is your mortgage options.
I would think that most people would agree that roughly 90% on the people that invest in the stock market make little to no money with their investments. The reason is most people really do not do their homework before they invest. Roughly only 10% of people will actually get professional advice before that invest. Yes there are always exceptions but for the bulk on investors we speak to our family and friends and not actual professionals. Just like stock market investing most people follow these same patterns when obtaining a new mortgage.
So let me ask you, do you think you would get the best mortgage deal from a mortgage company that only wants to sell their own product? It is no secret that a stock trader that wants to sell their own portfolio funds is because they make more money on these funds. Do you think your bank is not doing the same thing? It is my opinion, there is no difference as this business practice is exactly the same.
Mortgage Brokers use multiple investors which all look at your loan structure and supply roughly pricing. The Broker will use this information from their investors and discuss the options with you, the borrower, before an investor sees any of your personal information. Your best option is to use a broker that will look at your loan scenario as a direct lender and also a broker. The reason being is a direct lender option is not always your best option. This is more common than you would think.
I would recommend that you do a google search for a local mortgage broker and interview a view brokers until you find a broker you are comfortable with. For example, if I wanted a cash out mortgage in the city of Huntington Beach. I would do an internet search for“cash out mortgage Huntington beach” and there you will get a list of local mortgage brokers. I am confident that any of these people would be able to get you much better pricing than a bank. A five minute call could save you thousands. Keep in mind that brokers only get paid if your loan closes, unlike a bank Loan Officer, so they will move your file along quickly. Keep in mind; you should never pay any upfront fees when obtaining a new mortgage with a Bank or a Broker.
The Real Estate market continues to improve with homes values increasing roughly 8% on average in most of the coastal areas. This increased value as allow many people to refinance their homes and obtain much lower mortgage rates. With that said I have noticed an increase of questions addressing their mortgage rate on a loan they are about to get and recently closed loans. Nearly 50% of the inquires, that I have address, have mortgage rates that are much higher than the wholesale mortgage at the time the loan was structured. So what does that mean?
Lenders all make money on every loan that they do, we all know that. The question is how much money you are paying for your loan. Yes the A.R.P. can show you the amount that you are paying for your loan but this figure is often manipulated. You should be able to get a rate quote from any lender without them running your credit report providing you know what your fico score is. Also your rate will be subject to your personal information once reviewed. Once you have a few rate quotes then you will have an idea if you are dealing with a reasonable priced mortgage company.
The larger mortgage companies are the Banks themselves. Do not fool yourself, Banks today function much like a Broker. If your Bank Loan Officer says that they have DU approval on your file, most will not tell you, then they plan to sell the note once created. They will service the loan once created but servicing and owning a note are two different things. For those that do not know, service is much like a property manager when you rent a place to live. You deal with the property manager and not the owner. A servicer and a property manager are similar in terms of function to their client, client as in property owner or note owner. You can also look closely as your paperwork and loan docs and see if there is anything that states the Lender can sale your loan after you sign your loan docs. This is that same thing a Mortgage Broker will do.
This is why I always say to get a mortgage quote from a Bank, Direct Lender and a Mortgage Broker as the cost will vary widely. Look closely at your note rate, loan fees to close and your monthly payment. Keep in mind that Brokers are required to show how much they will make on a loan. Direct Lenders and Banks are not required to show how much they will make on a loan. This is because Lenders both depository and non depository that fund loans using their own funds do not have to show their fees, imagine that! Personally I find it shocking that a Bank, the place most people trust, does not have to show their fees but it is what it is.
The Feds have made many changes to the Mortgage Industry over the past four years but clearly, as indicated above, the industry favors the larger mortgage operations. Today roughly 70% of the small mortgage brokerage companies have closed down just as many of the Banks over the past 10 years. When looking for mortgage companies, look for a local mortgage company in your area, check them out with the Better Business Bureau and request a mortgage rate quote. Mortgage rate quotes should always be free of charge. Frankly all consumers obtaining a new loan should never pay any upfront fees.
MN Capital of Huntington Beach offer free online rate quotes.
MN Capital –