Mortgage Broker vs Bank

[Gomer Simpson]

Anybody feel strongly one way or the other? Advantages/disadvantages of either?

[cleanupcrew]

doesn't really matter much - a broker often has more options and programs but bank may be cheaper

the reality is that few banks protfolio the loans anymore so they are really little different than the broker

go with someone you trust and that has a good reputation

and then closely compare all costs and fees on the Good Faith estimate

I suggest you shop around - very competitiove right now - if you are buying vs refi check with any affiliated mortgage comapny to your broker - or if looking at new cosntruction check into Builders preferred lender - there are often significant saving with an affilliated lender (but look close as they can sometimes be more as well)

[CrewChief]

CUC pretty much hit it on the head, I worked in the wholesale side of things for 7 years and we dealt with Banks almost as much as Brokers. The one edge I would give a broker if you find a good one is usually you'll get a little more personal service. I've always liked dealing with a recommended people to a couple brokers I knew that were smaller shops with the owner being hands on and not acting like an executive playing a numbers game with 30 loan officers.

[Truth Detector]

the reality is that few banks protfolio the loans anymore so they are really little different than the broker

You aren't wrong often but you are this time. It doesn't matter whether or not they portfolio the loans. What matters is what they do with the servicing rights. Your loan will be sold over and over and over and over without you ever being aware of it. You only get notified when your servicing rights are sold.

If somebody you trust is a mortgage broker then use him but know that once the loan closes your friend is powerless. If you can find a bank that doesn't sell its servicing rights then you'll know where to go if you have a problem. But be prepared to pay an additional 1/8th percent or so on your loan. Most people become rate whores when shopping for a mortgage then complain about service later.

[Kid_Charlemange]

You aren't wrong often but you are this time. It doesn't matter whether or not they portfolio the loans. What matters is what they do with the servicing rights. Your loan will be sold over and over and over and over without you ever being aware of it. You only get notified when your servicing rights are sold.

If somebody you trust is a mortgage broker then use him but know that once the loan closes your friend is powerless. If you can find a bank that doesn't sell its servicing rights then you'll know where to go if you have a problem. But be prepared to pay an additional 1/8th percent or so on your loan. Most people become rate whores when shopping for a mortgage then complain about service later.

See I learned something today. I've been poking around looking @ loans, etc, and worried about using a broker. I wanted to go through a bank for service purposes. Hopefully I can find one that hangs on to its servicing rights.

[Topless69GT]

I am a loan officer in Plainfield Indiana. I have been one for over 14 years. I have worked for banks and for a very large mortgage company. I am now with a small broker shop (last 7 years) and I give better deals now than I ever could with the bank or with the mortgage lender.



Cleanup crew: You hit it on the head. Shop around and get a Good Faith Estimate. Keep in mind that the cheapest rate is not always you best deal. Closing costs play a big roll here.



Truth Detector: Servicing rights are not that big of deal to most folks but are huge to others. Sounds like you had a bad experience. I hope not but it happens. I just wanted to expand on your point. When there is a change in the servicer of your loan the terms of your loan can't be changed once it is closed. It is merely a function of where you send your payment. This point for me really would be the last thing that I am concerned about especially if it is a Fannie Mae, Freddie Mac, FHA or VA loan. For others this is a huge deal especially if they like to walk their payment into a bank. In this day an age of making payments on line and the information that you can find out about your account on the lender website has made this much less of a factor but can still be a valid concern. With that being said my personal rule is to broker my loans direct to the large lenders that do retain the servicing on most of the loans that they close. This is done for a number of reasons. A good mortgage broker is not powerless once your loan closes. They just don't have a good relationship with the lender and don't know how to get things done or don't want to help the client once the loan funds.



In addition to all the good advice given on this thread I would like to add a few things. Banks are usually not the most knowledgeable on mortgage loans. They are experts on the loans that they provide at that bank and not other programs that are out there. They usually have limited loan options compared to Brokers. A lot of Banks have inexperienced loan officers. Most of my friends in the industry started out in Banks (as I did) to learn the industry and then moved into the broker area or to large mortgage lenders such as GMAC, Countrywide or Wells Fargo. Always ask how long your loan officer has been a loan officer. On the other hand Banks do offer a vanilla loan product and the rate will be competitive and the closing costs will be moderate. In other words if you don't like using a broker this is a fairly safe option. Service will be less than with a good loan broker for the most part.



Now if you are using a broker be very careful and call around and get a Good Faith Estimate and ask if they will guarantee it within $100. There are a lot of these folks who were selling used cars and pushing the extended warranty yesterday and today they are a mortgage broker. There is one in Indy that I can't believe they are still in business with the deals they have done. I will refrain from mentioning them by name but they have giant billboards around Indy and other states

topless69gt
www.ryanburney.com

[Truth Detector]

Ryan, the best part about your reply is that you allow options for people to use based on preference. I've not had a bad issue with servicing rights but I have been in the banking business for 21 years (including 8 as a regulator) and have seen the good the bad and the ugly. Personally my turn-off regarding the sale of servicing rights is at tax time.

As to banks vs. brokers there's really no fair comparison. The last two banks I worked at hired our mortgage lenders from brokerages. They didn't suddenly become smarter or dumber when they switched jobs. I have a couple of customers who own their own brokerages. It's always best to go with somebody you know and trust.

[MichaelP]

if looking at new cosntruction check into Builders preferred lender - there are often significant saving with an affilliated lender (but look close as they can sometimes be more as well)

When we bought our house in 2005 we had a choice of going with our own mortgage company at 5.5% or with the builders company at 5.625%... the catch was that going with the builder's company got us $40,000 off the price of the house. Recently I've seen incentives as high as $100,000!

[cleanupcrew]

When we bought our house in 2005 we had a choice of going with our own mortgage company at 5.5% or with the builders company at 5.625%... the catch was that going with the builder's company got us $40,000 off the price of the house. Recently I've seen incentives as high as $100,000!

yep, that was my point - especially now

to be clear there is not that kind of profit to the builder from their associated lenders - they jsut figure if they're giving away the homes they want to try to egt back a little on the side ....

[Gomer Simpson]

Most people become rate whores when shopping for a mortgage then complain about service later.

I am said rate *****. It's all about the %.

edit - Oh sure, it's bleeped out when I type it.

[nm]

I would suggest that you DEMAND to see the closing statement a few days before the closing. I have seen too many mistakes on closing statements, even the seller's name being incorrect.

For anyone going thru a Section 1031 exchange on business or investment property, this is even more important.