Continuing the train of thought on advantages of using a mortgage broker versus a retail lender.
Most of your larger mortgage brokers have relationships with several of the same banks/lenders that have retail offices. So not only can they offer the same products that the retail establishment can provide, they can review what other similar large banks are offering.
In addition, we typically have several small boutique lenders in our portfolio of lenders we deal with. These smaller or "wholesale only" lenders generally operate with less overhead and less cost. They way they gain market share is by undercutting the pricing/rates of the large banks. This allows the mortgage broker to pass this savings on to the borrower. At least that's the theory, have there been times when the savings goes in the pocket of the broker, yes, but in this market when people are shopping around, that's few and far between.
In addition to improved pricing opportunities, there are various speciality niches that mortgage brokers can shop for. For example, in today's market if you have more than 4 mortgaged properties on your credit report, it is very very difficult or impossible to get a loan from a retail branch. But as a broker, I have a couple of small lenders that offer this product. Same thing applies for speciality things for investors, properties with chain of title issues, land programs, etc.
Having a larger portfolio of products allows the mortgage broker to look at the entire picture and find a solution that specifically meets the needs of the borrower. We don't have to shoe horn in a borrower into a specific solution that may not be the best fit.
If the only tool you have is a hammer, everything looks like a nail. Brokers have a lot of different tools available to them.
Thursday, August 20, 2009
Wednesday, August 12, 2009
Top X reasons to use a mortgage broker
I'm going to start here a running list of top reasons to use a mortgage broker versus walking into a retail bank or even internet only mortgage providers.
While I have a bias being a mortgage broker, however I believe I can be fair. At various times early in my mortgage brokering adventure I looked into signing up as a retail loan officer. It just didn't fit me.
Here is my off the top of my head list. I'll be adjusting and expanding on this over the next few weeks.
1. Loan Options. Mortgage brokers will have more than one source of loans, each lender has their own nuances with regards to offerings, underwriting, etc.
2. Personalized Service. In my practice I limit the number of active transactions I am personally handling at a time so that I can provide the personal service. Things like meeting the client at the new home. Meeting at their workplace to obtain signatures. Being available on weekends and evenings.
3. Pricing. By having options, we often can beat any single banks pricing at any given point in time. Not always, but in my experience about 98% of the time I can either match, or more typically beat a quote by a retail lender.
4. Answers. We have to know the details or of the mortgage business. We are not allowed to just sit at a desk and take applications, in order to be successful we have to keep track of the market, we must know how underwriting works, funding, the secondary market, etc. etc.
5. Licensing. In California we as mortgage brokers, must maintain a state license with the department of real estate. Retail loan officers are not required to be licensed and are not required to maintain their education in order to maintain the licensing requirements.
6. Fiduciary responsibility. As a licensed agent, I am under law to maintain a fiduciary relationship with my clients. This means I must look out for my clients financial interests. We can have a whole discussion how this is not always enforced, but I and many of my peers take this responsibility very seriously.
7. References. Many of us maintain a list of previous clients who gladly act as references.
OK that's a good start. I'll be listing some others. One more point. There are some very very good retail branch loan officers. However when you walk in the bank doors, you don't know if the person your talking with is one of those or not.
More to come.
While I have a bias being a mortgage broker, however I believe I can be fair. At various times early in my mortgage brokering adventure I looked into signing up as a retail loan officer. It just didn't fit me.
Here is my off the top of my head list. I'll be adjusting and expanding on this over the next few weeks.
1. Loan Options. Mortgage brokers will have more than one source of loans, each lender has their own nuances with regards to offerings, underwriting, etc.
2. Personalized Service. In my practice I limit the number of active transactions I am personally handling at a time so that I can provide the personal service. Things like meeting the client at the new home. Meeting at their workplace to obtain signatures. Being available on weekends and evenings.
3. Pricing. By having options, we often can beat any single banks pricing at any given point in time. Not always, but in my experience about 98% of the time I can either match, or more typically beat a quote by a retail lender.
4. Answers. We have to know the details or of the mortgage business. We are not allowed to just sit at a desk and take applications, in order to be successful we have to keep track of the market, we must know how underwriting works, funding, the secondary market, etc. etc.
5. Licensing. In California we as mortgage brokers, must maintain a state license with the department of real estate. Retail loan officers are not required to be licensed and are not required to maintain their education in order to maintain the licensing requirements.
6. Fiduciary responsibility. As a licensed agent, I am under law to maintain a fiduciary relationship with my clients. This means I must look out for my clients financial interests. We can have a whole discussion how this is not always enforced, but I and many of my peers take this responsibility very seriously.
7. References. Many of us maintain a list of previous clients who gladly act as references.
OK that's a good start. I'll be listing some others. One more point. There are some very very good retail branch loan officers. However when you walk in the bank doors, you don't know if the person your talking with is one of those or not.
More to come.
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