Should I use a Mortgage Broker or a Bank?
It may seem counterintuitive to work through a mortgage broker. Whatever happened to "cutting out the middleman" and walking into a bank directly? How can you possibly benefit from using a mortgage broker?
1) Banks discount their rates to us. This is because banks with wholesale lending are motivated to use mortgage brokers to advertise for them, process for them, and generally cut down on their overhead. For example, whereas a typical bank (let's call it 'ABC Financial') may charge you a 1 point loan fee on a 5% loan, they offer us 5% (or better) at par or no points. While we can often beat the bank's offer to the public directly, even if we can't, our roughly 1 point loan fee means we are always competitive.
2) We offer more options. If you walk into ABC financial they may have the best rate that day on a zero point conventional 15-year fixed mortgage. But what if you wanted to buy down the rate? Do they offer competitive buydowns? More importantly if they didn't…would they tell you? There is no single bank in the world that has the best rate on each and every program, each and every day. It is therefore our job to take your unique financial goals and direct you to the best bank on the market for your specific needs. If you want an adjustable rate mortgage, a 20-year fixed, a 30-year fixed or a high balance 15-year fixed…you guessed it, a great mortgage broker can secure the best possible rate on each loan scenario- utilizing a different lender for each product. Moreover, if you are not 100% familiar with the various financing options, we make it our job to advise and counsel you about these options, whereas a bank may only guide you to the products where they are most competitive.
3) We are far more motivated. Most bank employees are salaried. Whether your loan successfully funds doesn't impact the livelihood of employee Dave at ABC financial. At 5 pm he goes home. At 12 pm he's on lunch. If your loan faces extension fees, "too bad." You may either decide to close the loan with the lender or go elsewhere. Dave might care, but your well-being does not personally impact his life. On the other hand, as your mortgage brokerage we work to ensure you are happy. We don't get paid an hourly wage to sit behind a desk. We get paid when and only when you close your loan. If you have a problem we will fix it, and quickly. Our 25 years of success thus far, and our continued livelihood, depends mainly on referrals and repeat business. We are therefore hugely interested in your happiness.
4) We can react quickly and appropriately to the market. ABC financial won't give you advice on whether and when to lock in a rate, and they certainly won't let you know if the rate locked is a bad rate. As mortgage brokers we absolutely hate to break a lock with a bank, but most banks simply won't renegotiate if rates have dropped. If you are locked directly through Dave at ABC financial and rates drop you have no recourse. You can either sign your loan documents or you can start the process over entirely with a new bank you might not know. On the other hand, if you lock in a rate through us we will always watch to make sure that your rate is still competitive. We don't break locks for slight changes in pricing, but if you are closing a loan at 5% and rates just dropped to 4.5%, we will work to get you 4.5%. In working with a great mortgage broker you therefore have a somewhat flexible "safety net" carried by people who are personally invested in your happiness.
5) Possibly the most obvious reason to use a mortgage broker is the simplest: we are chosen by you to represent you, and we take that role very seriously. A bank employee's first and foremost concern is his employer…the bank. Our loyalty is instead to our 'employer' : you, the client!
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