Question Details

Marsha, Both Buyer and Seller in Cape May, NJ

How to decide to use mortgage broker or direct lender.?

Asked by Marsha, Cape May, NJ Mon Oct 22, 2007

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Compare apples to apples and get it in writing. I always suggest going to a local bank, a national bank and a mortgage broker. I have used all three depending on my situation. Sometimes if you are in a situation that requires a more personal touch, the local bank might charge a higher rate but can get it done. Whereas the mortgage broker says they can give you a lower rate, then they can't get it done and charge you a higher rate than the local would have. The national seems to go back and forth between the two.
Ruth
2 votes Thank Flag Link Mon Oct 22, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
Don't forget your local credit union. I've had associates who have gotten "conforming" rate loans over the conforming amount of $417,000. Why? They are local, portfolio many loans, and have local judgement as to the nature of the transaction. We had a problem recently with a big lender who called a property loan because in the MLS remarks it stated, "Fixer-upper". The loan was $250,000 on a $650,000 purchase!! The agent's buyer went to his credit union and got a BETTER RATE and NO issue with the "Fixer-upper" note.
Ward of Caution: Any of you who HAVE those terms in your remarks section are advised to get them out!! Lenders are hyper-sensitive nowadays. I like to go where the money is but don't overlook your local Credit Union. They are very much like the old "Thrifts" and "Savings and Loans". Kinda like "It's a Wonderful Life" with the old "Building and Loan"! But hey, It IS a wonderful life!!
1 vote Thank Flag Link Wed Oct 24, 2007
Two good answers already. The best way to decide is to ask for a good faith estimate and compare. Also, do you get the feeling the person is interested in helping you with your long term finances or trying to close a quick "deal". There are brokers and lenders in either category. Find a lender that you can call from now on who has your interests first.
1 vote Thank Flag Link Wed Oct 24, 2007
TU to Ruth for great advice.

If I may expand on that....

Mortgage Brokers:
Work with several lenders in attempt to obtain the lowest interest rate for you.
Are compensated by the lender post-close of property.
Have access to promotional offers that can lower closing costs.
The Con? Because they are dealing with so many different lenders, the odds for miscommunication increase, hence creating more possibilities of delaying the closing.

Direct Lenders:
Work with their own pool of funds and lend directly.
Approval process is simpler since no one else is involved.
The con? Less flexibility in overcoming roadblocks to getting you approved.

And as Ruth mentioned, don't overlook local banks who know the market and have local connections with appraisers, etc.. Sometimes a national bank can have problem connecting with local resources and will delay the closing.
1 vote Thank Flag Link Mon Oct 22, 2007
Patti Pereyra, Real Estate Pro in Chicago, IL
MVP'08
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