Financing in Westminster>Question Details

Adrian, Home Buyer in Westminster, CA

Should i go with the bank for the loan or go to the Mortgage broker?. the rate at the banks (BofA and

Asked by Adrian, Westminster, CA Thu Feb 14, 2008

WellsFargo) are a little bit higher than the broker rate, Can I trust mortage brokers (their rate is about .50% lower than bank rate), of course the loan fee is higher than bank (about .5%)
thanks a bunch

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I'm a mortgage broker, and I can tell you anyone quoting a rate 0.500% lower than what you're finding elsewhere is extremely unlikely. If you call a few major banks and they are quoting you around 6% on a conforming 30 year fixed, and some broker is telling you 5.50%.... most likely it is a lie. The rates between major lenders vary a little on conforming products...but more like 0.125% in the rate and not a full 0.500%. You mentioned the Broker's points are a little higher...but that doesn't explain it because the rule of thumb every 0.250% in the rate is equal to 1.000% in the loan origination fee (points). The primary reasons people use mortgage brokers (good ones, not the liars) is because we are able to process your application, advise you on the different types of programs (no income documentation, etc.) available and then submit the loan to one (or a dozen) of the major banks through their wholesale lending divisions. All with ONE application, ONE appraisal, and in many cases ONE ccredit report!!! If we lock in the rate for you at one bank, and during the escrow period rates fall...we have the ability to lock it at the new lower rate with one of the other banks we submitted your loan to. Most banks can't change you're rate once the rate is locked in (they usually lock it in upon receipt of your application...so it's just the luck of the draw how good
the rates are on that particular day. I can be reached at 818-481-8555 if you have questions.
0 votes Thank Flag Link Thu Feb 14, 2008
Banks have huge overheads that they need to pay. Brokers dont, and dont have to charge a higher rate/fees. Shop around!
0 votes Thank Flag Link Fri Apr 11, 2008
Hey Adrian,

What most people forget to mention is that, statistically speaking, you will refinance or sell your home every three to five years. Given this fact, you just need to determine if the diference in payments you are being charged by the banker will be higher than the upfront costs being charged by the broker over the course of 36-60 months.

As far as the trust issue, I am a big believer in knowing who you're doing business with BEFORE you commit yourself either way. The State has a site that you can check up on the loan officers you are considering working with. Here's the link: http://eservices.psiexams.com/crec/search.jsp

Hope this helps. Best Regards.

LP
0 votes Thank Flag Link Fri Apr 11, 2008
Adrian: Whether you are working-- with a banker or a mortgage broker-----ask the person you want to work with-- to MATCH the interest rate you are being quoted by another. There is a lot of flexibilty with both.
If they want your business-- they will go what is takes, in order to match the interest rate.
All the Best,
Kathryn Carlson, Licensed Real Estate Broker Owner ,
Bachelor of Science, Realtor, Accredited. Luxury Home Specialist, e-Pro Certified
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0 votes Thank Flag Link Fri Apr 11, 2008
The thing missing from this conversation is the question, "What is your goal?" What is more important to you, "Total Cost", monthly cash flow? Lowest front end cost"? ow long do you plan on staying in this new loan?

Your answers to these considerations will direct you to the terms of the loan that best fits you.

A word about the two offers before you. The fees on the Well's loan are less because the revenue to pay them are hidden in the rate. In terms of 'Total Cost", if you plan on staying in this loan more than five yrs (appx), it is always cheaper to pay now, rather than later. (translated: pay the fees and take the lower rate.)
0 votes Thank Flag Link Tue Mar 18, 2008
There are some good answers here, but there something no one has said. A Good Faith Estimate is great, you will see the rate, and fees. You need to compare the "Truth In Lending" this is the form that should come with the Good Faith Estiate, it shows you the rate once they include all the costs. This form is the easies way to tell what the money is costing you at a glance.

There is a statement that all rates are going to be close, broker or not. This may or may not be true a 30 yr fixed rate on Wells Fargo's web site https://www.wellsfargo.com/mortgage/rates?dm=DMIWFHPRAT&…
gives a rate of 6.125% (with an ARP of 6.353% on 145k loan) 30 yr fixed with a further look into their website you see they are charging 1point. (as of 6.22pm 2/14/2007)
Where as a broker there was a rate I found for 5.875% (with an APR of 6.064 on 145k) And I am charging 1 point as well.
In real money the savings is not .250% with a broker, but it is .289% of the loan in real costs.
It sounds to me that the broker you talked and was charging you 1/2 point more) to was trying to make a little more than he should. As a broker we should be able to save you money over all, or be honest, and say " Bank so and so is betting me, you better lock that rate"

The best thing to do, is check bankrate.com find out where the rates are on average, then do your shopping. Keep in mind that right on "Bankrates" site under rates it says "Rates my include Points" but they dont say how many points it may include so call a broker, call a bank. Find out the lock policy. Is your rate locked when they quote it? and if not what do you have to do to get it locked? If rates drop in two days, can you get the better rate or are you stuck with that rate (unless you change banks or brokers)

As far as trusting brokers go, get a referral to someone that someone you know has used. Or go the the Colorado Assn of Mortgage Brokers website.
Web Reference: http://www.altadenver.com
0 votes Thank Flag Link Thu Feb 14, 2008
Have both do a Good Faith Estimate (GFE) compare them and go with the best bet. Be sure to check out his link:

http://www.hud.gov/respareform/draft-gfe.pdf

Don't forget about asking them if the rate is locked, and ENSURE they both have impeccable reputations and deliver the loan at closing they quoted at the beginning.

A lot of banks broker loans out, but sometimes independent brokers have more flexibility in pricing and more loan program choices.

It is always a good idea to get at least 2-3 quotes.

Good luck,
Susan Walker
0 votes Thank Flag Link Thu Feb 14, 2008
I would shop a few lenders including Banks and Mortgage brokers. See who has the best programs that suit your needs. Different banks and Lenders offer different programs.
If you go to a Mortgage Broker, Check them out. Ask for some references. There are good and bad Mortgage Brokers out there. Make sure your transaction is handled by someone that has your best interest in mind.
0 votes Thank Flag Link Thu Feb 14, 2008
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