Where readers ask and we try to answer. Kelly are you listening!?
Why would a [mortgage] broker be better than a bank at this point in the market. I am an investor and have used brokers and bankers, both have been of great service to me in the past. But, I have relationships on both sides of the coin and it seems the playing field is level.
In the past I have used a broker for a faster turn time, more creative loan types, and reduced income documentation. Where as today, it seems as if there is no advantage to utilizing the broker. Perhaps the rate is a small amount lower(.125 at most), the fees are larger, there is more uncertainty and lack of control that the broker has in the grand scheme of things, and the banks they choose from, well, I have direct access to them. i.e, Wamu, Wells, Chase, Citi.
Please provide clarification for me. It seems like we have entered a 20 percent down world, regardless, and I would love some insight on the subject. I prefer to stay anonymous. Thanks
Since you preferred to remain anonymous on this, we had no way of contacting you to clarify the “and the banks they choose from, well, I have direct access to them. i.e, Wamu, Wells, Chase, Citi.” sentence you made. You lost us on that.
Regardless, thanks for the question and hopefully Kelly or another mortgage broker or possibly some bankers will come in with some answers.
before the summer of 2007 that answer was easy. When you would sit down with someone like me, I would basically do your shopping for you. I had access to over 100 wholesale lenders that would offer a full range of loan types. Because I sat down with you and we talked about what your objectives were I would get on the phone and find the best deal for you. this was a good thing for consumers. Now, with legisation and big banks wanting to cut out the middle men, there are very few loan types left,especially on the wholesale side so, the only advantage to using someone like me is that I do the footwork for you. Price was never really the tipping point between going to the bank directly or using a broker, the real benefit was to have someone like me on your side and independent of the bank. If one type of loan didn’t work out I would be able to switch up and take it somewhere else. As a consumer I would think that would be a difficult thing to try and figure out how to do.
I am very concerned for the consumer right now. there is a lot of legislation on the table both at the state and federal level that will make it extremely difficult for borrowers to obtain financing, with or without a broker. On the state level, stated income is very likely going to be outlawed. 100% financing is on the chopping block as well.
I guess the answer to the question is that for now, you still get the hands on service and benefit of an independent working on your behalf.
these are good things kelly. i’ve never gotten a loan on stated income, nor ever done a 100% financing. nobody should be doing that. we’d have had no crisis if it was that way legally.
kelly, the problem is that many mortgage brokers were not on the side of their customers. they were on the side of “which one of these loans will give me the biggest commission?” hence once of the reasons we are in our current predicament.
“Since you preferred to remain anonymous on this, we had no way of contacting you to clarify the “and the banks they choose from, well, I have direct access to them. i.e, Wamu, Wells, Chase, Citi.” sentence you made. You lost us on that.”
I understand (I think) what is meant, and that was my answer to the main quesion anyway.
I believe that no matter where your money is, you should interview/know your “banker” as good as the nanny of your kids. I always says that you should visit your local branch at least once a month, and KNOW someone there (one of the “bankers” with a desk is a start. if and when that agent moves to another office, follow hiim/her when possible). Talk about anything an everything. Every 6 months, sit down for a formal assessment of all your accounts, get your fees waved (most fees CAN be canceled by those agents), etc etc. The day we needed a mortgage, I phone our bank agent, she refered to aone specific loan manager, and we got our loan. The loan broker (that our RE agents forced us to contact, because they were not sure we had a good deal) couldnt believe that we – without any help – got the best possible rate at the time, with the lowest possible fees. (and with our credti scores)
I believe that “anon” means that: he/she might have regular/good standing accounts in those 4 banks, might have a personal relation with “bankers” there, and thus, have direct acces to good proposals.
If you think about it, credit score is only the tip of the iceberg, and why would our bank refuse a mortgage to someone with a so-so credit (me – I just arrived in the States) when they have months and months of phone bills, grocery bills, clothes and car bills etc to check on – and figure out by themselves how ‘risky” I can be?
And the opposite is true, we follow our mortgage like our kid. If it’s ever to be sold to another lender – we refi on the spot to a place we WANT to have our mortgage in. (same reason – if one month you need to negotiate your payment, how much easier when you can phone your friend at the bank – who will send you to the right person).
And of course, I agree with James. Maybe some types of mortgages shouldnt exist. Maybe if your local bank where you have your paycheck and pay your rent cannot lend you… maybe they have a GOOD reason for that. (ok – if your bank is a “normal” lender that was a good possible choice.)
Things have definately changed and these are things to consider and actually one should shop between the two to compare as things are almost changing weekly. One thing is for sure good credit, steady job and large downpayment are back in style.
A new thing is it is gonna take longer to get a loan than it use to qualify.
you shouldn’t be able to buy anything, commercial or property without 20% down. you shouldn’t be able to qualify for anything beyond a 75% debt to equity ratio. that’s where the market is going, back where it started, and it never should have swayed. are there any more banks with wholesale lending operations anymore?
Thanks for the insight. I do believe I get it. There is no need for a broker? Correct me if I am wrong. In regards to the exotic loans, they have gone away. So really, moving forward, it will be based off of Banking relationships?
I’m chosing to post this under alias since i’m a high-volume agent that has become increasingly concerned about working with brokers based on my experiences (and my clients experiences) over the past few months.
Specifically, i’ve had 5 transactions (just within the last several weeks) where I encouraged my clients to engage EXPERIENCED brokers that i’ve had very positive experiences with in the past. I’ve also encouraged them to reach out to local, direct lenders (BofA, WaMu, Wells) to make sure that things stay on track and to insure that they are able to get the best rates AND get everything done in time so that we can remove the loan contingency within the stated timeframe).
What i’m finding is that brokers appears to have ‘lost control’ (and their inherent value) when it comes to their ability to find the best rates and shepherd the entire loan process from application to funding.
For me, utilizing Brokers seems to have become more of a high-stakes/high-risk approach since they don’t appear to have the control and ability to drive the transaction like they have had in the past.
In two of my current deals (which were initially being managed thru a broker), the wheels fell off the wagon so late in game that we ended up having to extend the loan contigency and go with a direct lender. And this was for highly qualified buyers with 20%+ down.