Am I better off using a Direct Lender, Broker or Builders in house Lender if I'm in the market for a new home?

Asked by Mark, California Mon Apr 4, 2011

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, ,
Tue Apr 5, 2011
BEST ANSWER
Truly the answer lies with what is best for you....builders tend to not disclose all information to you....so beware...Brokers contrary to the last post can and do have much more flexibility to meet your needs and can place your loan where best suited accounting for time frame as well as other factors. Depository institutions (banks) will be less flexible and can typically take a very long time and your point of contact is typically nothing more than a data entry taker who may not know how to put your file together and just passes it on to a center.
The important key is a clear understanding of each...feel free to contact me for a no obligation consultation. 877-369-4319..
1 vote
Peter Machin, Agent, Long Beach, CA
Tue Apr 5, 2011
A direct lender for sure You would get a better interest rate over the long term
1 vote
Robert Finger, Agent, Irvine, CA
Thu May 16, 2013
Things to consider are what route of financing conventional or fha. Amount of down payment that you can afford. Fha offers great rates and possibilities of lender credit to help towards closing costs with certain lenders on the more or less side. Fha requires mortgage insurance and on the conventional loan side you can put down 20% and have no mortgage insurance yet depending on your income and debt one can qualify at higher ratios on the fha side than the conventional side of financing. I have not much knowledge of what the builder might offer incentive wize on the lending end yet I would also price out your options elsewhere as well. I feel you two are on it and great luck in your venture. I am both a Realtor and Lender for many years and am available for any of your venture thoughts and questions!
Thank You
Robert Finger
0 votes
, ,
Tue Apr 5, 2011
Hi Mark. You have alot of solid answers which, when its all said and done will depend on what's best for your specific situation. Because I use to work for a mortgage bokerage and now currently work for a direct funding mortgage lender (not to be confused with a checking and savings bank) I would tell you from personal expereince to speak to a direct mortgage lender. I would also tell you to make certain the loan officer is not just "registered" but also "fully licensed". Believe me, this will make a world of difference.

Programs wise, If the home is not constructed yet, and you're looking for an construction loan, FHA and VA will not be an option. The home needs to be completed prior to closing. However, depending on how long its going to take and if the builder is able to fund the build out himself, you can then go FHA or VA ( VA of course being for servicemen and women only) upon getting preapproved. Given the inherent and exclusive buyer protections in both, I would highly recommend them.
0 votes
, ,
Tue Apr 5, 2011
Just in case you have gotten enough opinions, let me give you one more. I have 22 years as a loan officer, of which I was a broker for over 18 years. Since I got on board as a mortgage banker, I have a ton more much control over my files than when I was a broker. Case in point, I received a call from a Realtor today. He has a client who's been in escrow over 60 days on a 45 day escrow. Because the broker was unaware of the actual lender's overlays (added requirements) he lost several weeks shifting his loan from lender to lender and finally was unable to close the deal. I on the other hand, know exactly what each of our investors requires. (Big Banks that buy our loans after funding) So I can avoid all the snarls and traps that I used to step in as a broker. This new file that I picked up today, I know exactly what land mines to avoid. I'll be able to actually walk up to my favorite underwriter, smile and ask her for a favor. As a broker, I never had access to the underwriters. Hope this helps.
0 votes
Gene Scott, Agent, Long Beach, CA
Tue Apr 5, 2011
Mark, I recommend a broker because brokers have access to so many different programs. We deal with 30 different banks, so we can match you up with the program that best suits your needs.

Every once in a while, a direct lender like BofA or Wells Fargo will be better suited for a client, so I will refer them there, but that happens very seldom. I

f you are buying from a builder, sometimes the builder will buy down your rate if you go with their lender. If you are looking at new home, obtain a preapproval from a broker, and then you can compare the rate you receive from the builder's lender.

Hope this was helpful.

Good luck,
Gene Scott
Mark 1 Mortgage
562-212-2345
0 votes
Constantine…, , San Diego, CA
Tue Apr 5, 2011
Hi Mark!
Just get an online preapproval from E-Approval.com then compare rates on Zillow.
You can do this on your laptop and never have to speak to a salesman. Don't be afraid to get your hands dirty and do a little research, you just may save yourself thousands of dollars!!!!
If you have any questions, call me. I'd be happy to help if I can!
858-848-LOAN
Web Reference:  http://www.E-Approval.com
0 votes
Kobi Costa, Agent, Encino, CA
Tue Apr 5, 2011
I my experience, a loan broker is usually the best way to go. A good option is to "double app" with a broker and a direct lender.
Web Reference:  http://kobicosta.com
0 votes
Nolia Boole, Agent, Long Beach, CA
Tue Apr 5, 2011
If you plan to buy a bank-owned property or a home listed as a short sale, you will need a pre-approval from a direct lender or your offer won't be accepted.

Nolia Boole, Broker
Long Beach, CA
Web Reference:  http://www.nolia.net
0 votes
Emily Knell, Agent, Huntington Beach, CA
Tue Apr 5, 2011
You got a lot of great answers. I work with a direct lender (Wells Fargo), but I also have mortgage brokers I use as well. Sometimes the direct lenders' rules are too strict in particular cases or I can find a better program for my client by going through the mortgage broker.

You can put applications in with both types of lenders & see who comes out on top with the best deal for you.

Are you looking for a home in Lakewood or Long Beach? Or are you venturing into Orange County? Lakewood area, I don't think you will be applying with any builder in house lenders.

Email me directly if you'd like me to show you what's available in your price range. Alternatively you can search the MLS just like I do at the web link below.

EmilyKnell1@Yahoo.com
Main Street Realtors
Realtor Since 1996
562-430-3053 cell
0 votes
Lance King, Agent, San Francisco, CA
Tue Apr 5, 2011
Mark,

In our experience lender direct is the best way to go. If you are being represented by an agent/broker (and if not you should be) he or she should be able to refer you to several lenders with different programs. Although mortgage brokers work with lots of lenders, we've never had a bank fail to fund when they said they could do a loan but it's happened several times with mortgage brokers.

The best way to decide is review loan programs of all three and see who has the best program for you based on your income, credit, and debt. Make sure you review all the fees of each as well. Best rate is not always the best deal.

Best Regards,

Lance King/Owner-Managing Broker
lance@fixedrateproperties.com
415.722.5549
DRE# 01384425
0 votes
Melissa Seid…, Agent, Long Beach, CA
Tue Apr 5, 2011
Every person's financial situations is different but I would most often recommend a direct lender. :)
0 votes
jjacobsDO, Landlord,
Tue Apr 5, 2011
Mark,
Such a great question!
Here is your answer.
Go with a Bank and you will win as the consumer.

Builder in house lender's offer nothing but a lot of "smoke and mirror's designed to only place additional benefit to the Builder.

Mortgage Broker's today are extremely limited in what they can actually deliver as previously conveyed within this forum. Thier creativity has been taken away essentially by our Government. Sad but true.

Mortgage Banker's continue to have the ability to offer in house "portfolio" loans which are often very creative and the bank is making the final decision on your approval. Taking out the middle-man such as a Builder-lender or Mortgage Broker. You will always get the best deal with a strong Bank.

Important: If you have a Builder construct your home make sure the builder/seller "incentive to buy" is written within your contract that you can apply the cash incentive towards your banks closing costs and demand you close with YOUR title company as it is now your right as a consumer. Title fees also contribute to the profit of most Builder's.
It is by far best to not have any incentive applied towards a "builder design center", because the design center is the HIGHEST profit center the builder has, and you loose at minimum 50% of the incentive value to thier profit. This builder strategy contributed in a huge way to the RealEstate crisis by falsely driving values up !

In regard to which bank seems to be offering the best deals today, I would ahve to lean towards BBVA-Compass Bank. I have closed and represented many buyer's who received a loan with BBVA and have been simply amazed at the creativity and availability of funds and programs to my clients. I just had a client close with 100% loan to value and No Mortgage Insurance.

Try reaching out to a mortgage Officer Tom R. Callahan at tom.callahan@bbvacompass.com
He may be able to assist you.

Good luck and buy with your eye's open ! TJ Attorney
0 votes
Bill Eckler, Agent, Venice, FL
Tue Apr 5, 2011
Mark,

Yes, yes, and yes.......

Our recommendation is to consider all three but be certain you understand the terms and conditions of each.

One thing we would strongly recommend is getting pre-qualified with an outside funding source prior to talking seriously with the builder. They of course, would like to see you go with their funding since it allows them a certain degree of flexibility with a creative budget approach.

Entering a situation such as this having all ready been approved for financing can neutralize this.

Bill
0 votes
Jim McCowan, Agent, Arlington, VA
Tue Apr 5, 2011
I think it makes sense to use a direct lender instead of a broker. A direct lender is using his/her own money and has control. A broker is trying to use someone else's money. I've had too many negative experiences with brokers who promise the moon and then can't deliver.
0 votes
Gregorio Den…, , San Diego, CA
Tue Apr 5, 2011
That's actually a convoluted question and one that suggests you have not actually spoken to anyone regarding financing. There are compelling reasons to use either of the 3 you mentioned, but at the stage it appears you are at, these are just buzz words.

For Example: Are you having a house built? How does a builder's in house lender play into your specific scenario if at all?

My suggestion would be to speak with someone about what it is you are trying to accomplish; preferably a DRE licensed, NMLS endorsed, California loan originator. There are many on this site: Pick one and accept no substitutes!
Web Reference:  http://TripointMortgage.Net
0 votes
Oggi Kashi, Agent, San Francisco, CA
Tue Apr 5, 2011
It depends on the specific property and your personal financial situation Mark. How strong of a borrower are you? Depending on what you bring to the table, one option may suit you better over another. By all means, speak to each lender and see what they have to offer.
Web Reference:  http://www.oggikashi.com/
0 votes
Brad Cummings, Agent, Long Beach, CA
Mon Apr 4, 2011
HI Mark, I recenly helped some folks buy a new home in Stanton and the builders lender offered rates and terms other lenders couldn't match...I would get two quotes, one from the builder and one from a reputable direct lender.
0 votes
Laura Coffey, Agent, Santa Clarita, CA
Mon Apr 4, 2011
Most builders will offer you the best deal because of incentives but check their good faith estimates against others.
0 votes
Dan Tabit, Agent, Issaquah, WA
Mon Apr 4, 2011
Hi Mark,
No definite answer. I'd start with what the builder's lender offers. Sometime they have a builder contribution that others can't match. If they will lock a currently competitive rate for 6 months it could be a great choice.
If the builder's lender doesn't have anything special, you may be able to do well with either a broker or direct lender.
0 votes
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