When should you use a Mortgage broker to find your loan?
The answer to this question is...every time! Unless, of course you have perfect credit, low debt and high income, and a close personal relationship with the branch President at your bank. Then (maybe) they'll be able to get you better rates and terms than a Licensed Mortgage broker. But you're still limited to the loan products offered by that bank (or credit union). Here's another page from the Top 10 Lists site that explains why a Mortgage Broker can get you a much better deal on your Home Mortgage for a purchase or re-finance.
Top 10 Reasons to Use a Mortgage Broker to Find Your Mortgage.
10. Banks, Credit Unions, and Savings and Loans have strict guidelines to follow, and offer only a limited group of loan options. The Financial Institution where you have your checking or saving account has very little flexibility in what they can offer you for a mortgage loan. You either qualify or you don't, and if you do, they can only offer you the limited programs that they offer (See Greenspan article).
9. Each Bank or Credit Union is a totally different company, so you have to apply to each one separately. Some on-line services do offer quotes from several different ones with one application, but even then, you're limited to the financial institutions signed up with that service. Many Mortgage brokers use a nationwide network of lenders, that you can't access on your own. So they have a huge variety of options to choose from, and they'll do the work of finding you the best deal.
8. Fully Licensed Mortgage Brokers have extensive training and have passed a difficult certification exam. They also have to complete Continuing Education courses to keep abreast of changes in law and programs. Plus, holders of a Mortgage Broker Business License have even more experience and training. In contrast, the loan officer at your bank does not have to be licensed or take any training courses. Someone at that bank is licensed, but it may not be them!
7. Mortgage Brokers can help you get the best mortgage quickly and easily. Many Mortgage Brokers will even come to you, at work or at home, to take your application. Some will even come at whatever time is most convenient for you, day or night. You don't have to take time off work to come and apply at their office, at their convenience, during regular "banker's hours".
6. Mortgage Brokers can usually get you rates that are as good or better than banks or credit unions. Why is this? It's because the bank has to pay salaries. They pay loan officers, branch presidents, vice presidents, etc. Plus, they have high overhead for buildings, branches, advertising and so on, and a lot of their services ("free" checking and savings accounts) generate very little revenue. The difference in what they charge for interest, compared to what a Broker can find for you, goes to pay all of those things.
5. Closing costs are normally the same, except for the broker's fee (more about that later), and can usually be rolled into the loan on refinance loans and some new purchases. Closing a loan with a bank or with a broker, you basically have the same fees (title, state endorsements, wire fees etc.) and escrows (money collected in advance of when it's needed) for insurance and taxes. The only difference is the fact that brokers normally charge an up-front fee. Most charge this as a percentage of the loan amount, 2%-4% being a reasonable range, although some charge more. Which brings us advantage number 4.
4. Brokers normally charge an up front fee. Why is this a good thing, you ask? Because, unlike institutions that don't charge a fee, the broker is concerned with finding you the best mortgage at the best rate available. They also don't have to charge a higher rate to collect their money over time. This is to your advantage, because the lower rate you get makes it well worth it! For example, if a broker saves you only 1/2 of 1% on your rate, but charges you a 2% fee to do so, within about 5 years & 3 months you have saved every penny that it cost you to pay the broker. With the bank loan at a .5% higher rate, you keep paying for the next 24 years! Plus on a $200,000 loan you save about $753.00 a year in payments, or $22,586.00 over the course of a 30 year loan! All for a cost of only $4000.00 up front. So the question is, would you rather pay a $4000 fee or a $22,586 "fee".
3. The Mortgage Broker has a personal interest in finding you the best mortgage and closing as quickly and easily as possible. A Mortgage broker gets paid their fee when you close your loan. On the other hand, the loan officer at a bank gets his salary whether or not you get your loan, and the bank gets its profit from charging you the highest interest it can. Which is why many either don't offer, or don't advertise ARM's, or Adjustable Rate Mortgages, which normally have rates well below comparable fixed rate mortgages (0.5% to 1.2% or more).
2. Many Mortgage brokers offer Interest Only Mortgages and other payment options not available at banks, credit unions or savings and loans. Not only are these programs normally easier to qualify for, but they reduce your payment, while you still gain equity through appreciation. Some even offer programs with payments lower than interest only, or that give you several options as to how much YOU want to pay each month! (See the other Top 10 Lists for more!)
1. Get the best rate and terms for your situation, as quickly and easily as possible, and save money every month on the perfect mortgage for YOU! Especially if you've been turned down by your financial institution, or quoted a ridiculously high rate because of your credit (or lack of it), or even if you're just getting started looking for financing, give a Licensed Mortgage Broker a call. They can help guide you to the best program for you.
Take a look at the rest of the Top 10 Lists to find the best rates and the best broker.
Subscribe to this feed or come back here later, and I'll post the rest of the Top 10 Lists and some other mortgage loan information and comments.
Top 10 Reasons to Use a Mortgage Broker to Find Your Mortgage.
10. Banks, Credit Unions, and Savings and Loans have strict guidelines to follow, and offer only a limited group of loan options. The Financial Institution where you have your checking or saving account has very little flexibility in what they can offer you for a mortgage loan. You either qualify or you don't, and if you do, they can only offer you the limited programs that they offer (See Greenspan article).
9. Each Bank or Credit Union is a totally different company, so you have to apply to each one separately. Some on-line services do offer quotes from several different ones with one application, but even then, you're limited to the financial institutions signed up with that service. Many Mortgage brokers use a nationwide network of lenders, that you can't access on your own. So they have a huge variety of options to choose from, and they'll do the work of finding you the best deal.
8. Fully Licensed Mortgage Brokers have extensive training and have passed a difficult certification exam. They also have to complete Continuing Education courses to keep abreast of changes in law and programs. Plus, holders of a Mortgage Broker Business License have even more experience and training. In contrast, the loan officer at your bank does not have to be licensed or take any training courses. Someone at that bank is licensed, but it may not be them!
7. Mortgage Brokers can help you get the best mortgage quickly and easily. Many Mortgage Brokers will even come to you, at work or at home, to take your application. Some will even come at whatever time is most convenient for you, day or night. You don't have to take time off work to come and apply at their office, at their convenience, during regular "banker's hours".
6. Mortgage Brokers can usually get you rates that are as good or better than banks or credit unions. Why is this? It's because the bank has to pay salaries. They pay loan officers, branch presidents, vice presidents, etc. Plus, they have high overhead for buildings, branches, advertising and so on, and a lot of their services ("free" checking and savings accounts) generate very little revenue. The difference in what they charge for interest, compared to what a Broker can find for you, goes to pay all of those things.
5. Closing costs are normally the same, except for the broker's fee (more about that later), and can usually be rolled into the loan on refinance loans and some new purchases. Closing a loan with a bank or with a broker, you basically have the same fees (title, state endorsements, wire fees etc.) and escrows (money collected in advance of when it's needed) for insurance and taxes. The only difference is the fact that brokers normally charge an up-front fee. Most charge this as a percentage of the loan amount, 2%-4% being a reasonable range, although some charge more. Which brings us advantage number 4.
4. Brokers normally charge an up front fee. Why is this a good thing, you ask? Because, unlike institutions that don't charge a fee, the broker is concerned with finding you the best mortgage at the best rate available. They also don't have to charge a higher rate to collect their money over time. This is to your advantage, because the lower rate you get makes it well worth it! For example, if a broker saves you only 1/2 of 1% on your rate, but charges you a 2% fee to do so, within about 5 years & 3 months you have saved every penny that it cost you to pay the broker. With the bank loan at a .5% higher rate, you keep paying for the next 24 years! Plus on a $200,000 loan you save about $753.00 a year in payments, or $22,586.00 over the course of a 30 year loan! All for a cost of only $4000.00 up front. So the question is, would you rather pay a $4000 fee or a $22,586 "fee".
3. The Mortgage Broker has a personal interest in finding you the best mortgage and closing as quickly and easily as possible. A Mortgage broker gets paid their fee when you close your loan. On the other hand, the loan officer at a bank gets his salary whether or not you get your loan, and the bank gets its profit from charging you the highest interest it can. Which is why many either don't offer, or don't advertise ARM's, or Adjustable Rate Mortgages, which normally have rates well below comparable fixed rate mortgages (0.5% to 1.2% or more).
2. Many Mortgage brokers offer Interest Only Mortgages and other payment options not available at banks, credit unions or savings and loans. Not only are these programs normally easier to qualify for, but they reduce your payment, while you still gain equity through appreciation. Some even offer programs with payments lower than interest only, or that give you several options as to how much YOU want to pay each month! (See the other Top 10 Lists for more!)
1. Get the best rate and terms for your situation, as quickly and easily as possible, and save money every month on the perfect mortgage for YOU! Especially if you've been turned down by your financial institution, or quoted a ridiculously high rate because of your credit (or lack of it), or even if you're just getting started looking for financing, give a Licensed Mortgage Broker a call. They can help guide you to the best program for you.
Take a look at the rest of the Top 10 Lists to find the best rates and the best broker.
Subscribe to this feed or come back here later, and I'll post the rest of the Top 10 Lists and some other mortgage loan information and comments.
posted by Jack @ Thursday, February 10, 2005
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