Financing in California>Question Details

Mario , Home Buyer in San Francisco County,...

I'm nearing close and need to choose between a mortgage broker and a large bank to close, which should I go with?

Asked by Mario , San Francisco County, CA Thu Mar 11, 2010

I'm in the process of comparing costs between a mortgage broker and a huge institutional lender. Assuming all things being equal regarding fees (which I'm still trying to figure out), is it better to go with a large institution or a broker? There are some things that I want to know before closing, like who owns my loan, whether they will let me pay every two weeks, etc., and the bank is able to tell me these things right now. The broker hasn't provided me with that information for whatever reason. I also know that big banks may sell my loan off anyways, but it just seems like they have more purview into the near-term management of my loan. Should I be even worrying about this? Can brokers ensure the same level of customer service ongoing? Should I be basing my decision solely based upon interest rate and fees?

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If all cost are the same, go with the company that can close you the quickest! Gita is correct, every lender, ban or broker, is getting slammed with the end of the tax credit coming near! GOOD LUCK
0 votes Thank Flag Link Fri Mar 12, 2010
Others have already given you advice , after comparing the two, whatever you decide please do it soon as lenders are getting very busy because of the deadline for tax credit.
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0 votes Thank Flag Link Fri Mar 12, 2010
Hi Mario
The reason you may not be able to get that answer from a broker is that until you've committed to them and they've "locked in" pricing they probably won't know who will own the loan so they can't comment on a particular lender's policies. You could likely get those answers before closing, but not before committing to the process with them. And what if you don't like the answer you get? Then it is too late.

It sounds like these are important things to you, so you should be concerned about these things. You said assuming all things equal regarding fees, so I take it that the loan terms are fairly close between the two lenders. If that's the case, then the tone of your email would make it sound like the big bank is what suits you the best.

I've worked at both ends of the spectrum in my career. In general, a broker is probably going to have a little more influence on the process leading up to your closing - a more personal experience, flexibility, etc - while a large bank is probably going to provide more consistency and stability throughout the life of your loan. However there are always exceptions to that generalization. At the end of the day, I'd encourage you to work with the lender you have the most confidence in to deliver on their promises. Because if they can't close you on time and deliver then everything is a moot point.

Hope this helps
0 votes Thank Flag Link Fri Mar 12, 2010
Hi Mario:

I hope you have both loans quite solid by now, especially since you said you are 'nearing' close. Have you removed your loan contingency yet? If so, you need to work with whoever can definitely provide you with the loan and finish all the process required to fund and close per contract. If not, you have the potential of losing both your deposit and the house.

As you have told yourself, I don't think a broker can ensure ongoing service for 30 years. Once you signed the loan doc, if your loan is like my, we just pay our mortgages monthly (automatic deposit is the prefer method, and then we will recieve the statements and occasionally a letter to tell us our loan has been sold. But all terms and conditions stay the same when a loan is sold.

You will need to get answers from your mortgage broker about the terms of the loan, the pre-payments, before you go foward = basically, you need somebody to tell you the terms of your mortgage, otherwise, you can't sign up with that loan.

Yes, watch closely to make sure you meet the deadline of whatever (your agent should be totally on top of that and reminding you to move along to meet your contractual obligation) to ensure a successful close of escrow.

Sylvia Barry, Marin Realtor
(415) 717-0293
0 votes Thank Flag Link Thu Mar 11, 2010
Sylvia Barry,…, Real Estate Pro in Marin, CA
I like the advice you've received. The Mortgage Professor repeats below what you've read and expands on shopping a mortgage. Keep in mind that mortgage brokers need not be local, just California licensed.
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0 votes Thank Flag Link Thu Mar 11, 2010
Hi Mario,

I'm an agent in San Diego county. However, I have a broker up in the Roseville, CA area that I refer my buyer clients to. I've been in the industry for many years and have dealt with tons of brokers and direct lenders. It has been my experience that you can typically get congruent, if not better, pricing on your loan through a broker. A broker has access to many direct lenders so they can shop for you in regards to interest rate as well as a loan that works best for your specific transaction. It's taken me a long time to find an excellent broker with business practices similar to mine... i.e. the client needs come first.

The broker I mentioned above is Kat Whitman at Whitman Metropolitan ( I respect Whitman Met's business practices because they will answer any question you have.... Even in regards to what they make on the loan and how much. They have no junk fees and aim to get you the lowest rate out there by cutting their own pay on the back end. Definitely give them a chance to quote you and let Kat know that I sent you her way.

Best of luck!

Tara Steinke
Solant Real Estate Advisors, Managing Associate
0 votes Thank Flag Link Thu Mar 11, 2010
I would base my decision on 2 things.
1 who charges the least (interest and fees combined)
2 do they have a reputation for being reliable?

1+2 = winner
0 votes Thank Flag Link Thu Mar 11, 2010
All of the information you have been given is great. However, I also would like to mention one other thing. Have you considered sitting down with the Mortgage Broker or the Large bank and getting direct answers to these questions? I know the Mortgage Broker we have in our office is willing to sit down and compare his loan product to the Bank's. He will admit when he can't be the best choice for the client. But often he is more than willing to make a little less on the loan so he may negotiate some of the fees or suggest a different rate that doesn't pay him quite as much money. Which in turns save you money!
Generally speaking, you are correct in assuming that your loan will get sold off. However the new owner of your loan should have to follow the terms of your loan as it was when you signed for it at closinig. So, I would recomend a good heart to heart with your lender and get it placed into the loan contract that you can do certain things such as pay every two weeks.
Best of luck to you!
0 votes Thank Flag Link Thu Mar 11, 2010
Hi Mario,
It sounds like you have the right questions in mind. I will always suggest a broker over a large bank anyday of the week not just because I am a broker it is for the very simple fact of blanket training, certification both state and federal, just the knowledge of all levels of lending and law changes. Not to mention If you get turned down by a bank then you have to strike up the working relationship all over again which is such a waste of time and makes you uncompetitive. A good broker is on the ball, we have our teeth on the line..Large banks will not have to disclose back end fees where a broker by law has to. I have spent this past year closing deals for clients that have been turned down by all major institutions. Large banks are just that large and hire people that have no stake in your timeframe there knowledge only reaches as far as the front door. Good luck Mario and if any questions please feel contact anytime.

0 votes Thank Flag Link Thu Mar 11, 2010
A mortgage broker will work harder than a big bank to close your loan. Good brokers look to build relationships, obtain referrals, and have you as a client for life. At least I do. A good mortgage broker will take your call after hours and some on weekends. Banks wont. Mortgage brokers/bankers can shop rates at multiple sources. Get referred to a good, respected broker and make them a part of your sphere of influence. You will have a trusted adviser for life that you can call anytime. The person at a large bank wont be there for you long term.

Don Maher
Universal Capital Mortgage Corp
(800) 736-0565 ext. 206
Funding Loans In CA for 20 years
Dre Lic # 01025802
0 votes Thank Flag Link Thu Mar 11, 2010
A Mortgage Broker is a "Middleman" between the Mortgage Banker or Lender. I would go with a reputable Mortgage Lender or Mortgage Banker like Wells Fargo, Bank of America, etc.
0 votes Thank Flag Link Thu Mar 11, 2010
Now, these are all opinions coming, but I believe the best sources for financing come from mortgage bankers who are not just one bank.

For instance, some mortgage companies have relationships with lenders where they can get pricing from multiple banks like brokers do, but they underwrite and fund the loans themselves to fit the other lenders guidelines. This is ideal because you still get the luxury of working with someone who can competitively price your loans but can control the process.

Brokering loans leaves the quality of service regarding underwriting and funding out of the brokers hands. Coming from someone who used to broker 100% of my business, the service levels given to brokers is too poor to be consistent for a good consumer experience. It didn't used to be this way but has moved that way since the market has changed.

Banks offer one product pricing and set of guidelines. They also fund and underwrite their own loans but you don't get to competitively shop the loan unless you do it yourself.

It's sort of confusing, but in my opinion, work with a mortgage banker with multiple correspondent relationships, has the ability to broker the loan if they wish to, and underwrites/funds their correspondent loans in-house.
0 votes Thank Flag Link Thu Mar 11, 2010
If every single thing is equal cost, and the bank is also giving you good customer service, go with the bank.
0 votes Thank Flag Link Thu Mar 11, 2010
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