| By: Bill McInerny, President of Agape Home Mortgage Inc. With all the mortgage options out there today, it's no wonder consumers are confused about where to get their mortgage. Every bank and mortgage company is saying they have the lowest rate, but how can you be sure that is what you're getting? One of the first things to consider when shopping for the lowest rate is "Where should I go to get my mortgage?" Is the bank or the broker better? Let's compare what service a broker offers versus a bank: | Broker | Bank | | Access to mortgage products from banks to savings and loans to mortgage bankers to private money. Any established broker will have multiple relationships in each of these funding sources. Therefore, the broker has access to virtually limitless loan options for the consumer. | Banks normally do not broker their loan products. Therefore, the bank is usually limited to a handful of loan product types to offer the consumer | | The expertise of the mortgage broker is mortgage products only. Knowing this, any reputable broker will spend significant time learning and developing their mortgage product knowledge to best serve the customer. | Banks are often required to cross sell other financial services with their mortgage products. These can benefit the consumer, however, it is not always best to have all your eggs in one basket. Also, with knowledge required in multiple financial areas, it can become difficult to spend the necessary time to keep up on all the mortgage knowledge necessary to best serve the customer. | | Personal one-on-one attention by one loan officer. Most loan officers are paid on commission, and thus have a direct, vested interest in seeing that the customer is as satisfied as possible. Without customer satisfaction, the loan officer would not receive referrals. Since brokers don't have the advertising budget of a bank, most brokers depend on referrals to continue to do business. | Often, your request is handled by a salaried bank officer. The bank officer gets paid regardless of whether or not your loan request closes. The bank officer doesn't necessarily need to depend on your referrals or recommendations, since the bank can advertise heavily to draw more customers. This is not to say that many banks do have loan officers who are wholly committed to seeing the customer serviced to the best of their ability. | | Rates often lower because of lower overhead associated with operating a mortgage brokerage is much lower. The difference is usually seen as a 1/8% to 1/4% discount over the rate of a typical bank. This doesn't sound like much, but over the life of a loan can add up to $1,000s. | Higher overhead costs and need to appease shareholders, thus higher margins resulting in higher rates on mortgages. Sometimes however, home equity line of credit products can be cheaper, but only when the bank runs specials. | There is the common misperception that using the services of a broker is more expensive than a bank. The question most asked is this: Why would I pay a mortgage broker an extra fee instead of just going directly to the bank? Good question! What most people don't know is this; a mortgage broker obtains a wholesale price for the mortgage, adds the customary loan fee and offers the lowest possible retail rate to the customer. So then you ask: Why can't I get that wholesale price? Another good question! In exchange for the wholesale price, here are a few of the things the mortgage broker does: - Obtain all necessary licensing, bonding and insurance to be able to operate as a mortgage broker. Each state has their own set of guidelines and separate licensing requirements.
- Receive mortgage origination, processing and closing training
- Abide by all applicable state and federal disclosure laws pertaining to mortgage origination and funding
The next step is finding a good mortgage broker. The first two places to check are: - The State Finance Division within your home state where the property will be financed. This will be located in the capital city of your state. They are usually listed under "Division of Finance" or "Division of Finance and Corporate Securities."
- The Better Business Bureau. Not all companies are members of this agency. However, whether or not you are a member, they can always tell you if there have been complaints files against the company you are considering. Just because someone is a member, doesn't mean they will necessarily have a good record
The questions to ask each of these places are: - Does the company you are looking at have any complaints filed against them?
- If so, have these complaints been resolved to the satisfaction of the consumer?
So much can be discovered through these two agencies, and it will narrow your list down in a hurry. The next difficulty sometimes is just getting someone to return your call. So often customers have called and said, "Ah, finally a live person." My question to them becomes "Did you have trouble reaching someone here?" Most often, it is the case where they have been calling companies all day and had to just leave messages with no returned calls. If you are not easily able to get a return call in the beginning of the process, it is not very likely that once in the process, it will be any better. It is so frustrating to be involved in one of the biggest financial decisions of your life and not be able to speak with the person who is responsible for providing the financing. If you have been declined by a bank or another broker already, don't be discouraged. Again, banks are often limited as to how many different types of consumers they can approve. This is based on a limited number of loan products and underwriting choices available. Sometimes, one broker could deny a mortgage that another broker can approve. Most brokers have access to all the same sources, but not every broker is willing to take the time to learn as many of the various nuances as possible to make their service as complete as possible. This is so important, as it can be a disservice to a customer to have a way to approve their loan, but not know where to go or what to do to achieve the approval. The state and federal regulators know this, and have been taking measures over the last 5-7 years to insure that each mortgage broker and loan officer meet minimum requirements to be able to do business in various states. Most of this has to do with properly servicing the consumer with the best available knowledge and resources. Because of the financial clout of most banks and financial institutions, they are not subject to many of the same laws as mortgage brokers, thus are not required to disclose as much to you, the consumer. This can be frustrating because you don't know if you are being left in the dark in matter that can be very important. These are some of the most obvious comparison between banks and brokers, however it does not cover the whole gambit. Due diligence in making a selection can increase your chances of making your home buying or refinancing experience as painless and stress free as possible. Following some or all of these ideas above will help. Agape Home Mortgage Inc. dba fastapproval.com is a broker, and has been established since 1991. Agape is prepared to serve your needs by providing all the advantages of a mortgage broker plus more. Call 503-504-4493 today to schedule an over the phone appointment or apply online. |
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