Brokers Are Better: Here's Why

Buying a home is likely the largest purchase that a person or family will ever make. That means they’ll want to have the right people by their side when it comes to making this purchase. There are many key players in the home-buying process, but obtaining a mortgage loan is the most important part of setting expectations and budgeting for monthly payments. After all, most homeowners can’t set their sights on their dream home without first securing a pre-approval for a mortgage.

Discovering?the?right?financial?expert?doesn’t?have?to?cause added stress!?Borrowers?can?begin?with?one?basic?query:?

"Do I work with a mortgage broker, lender, or banker?"

I have worked in all three roles in my career and I can tell you with full confidence that I strongly feel that the answer is always to work with a mortgage broker.

What exactly is a Mortgage Broker?

Mortgage?brokers?are?home?finance?professionals?who?essentially?shop?for their clients.?In?other?words,?they?act?as?an?intermediary?between?the?borrower?and wholesale mortgage lenders/investors.?

Mortgage brokers do not use their own institution's funds to originate mortgage loans as a representative of a bank or credit union does. Rather, they get to know their clients and understand their goals, evaluate relevant loan programs with their client's goals in mind, and find the best solution/s to best achieve their client's goals. Think of brokers as a personal shopper that knows what you like as opposed to someone just working the checkout and going through the motions. As I say, "I'm a Mortgage Advisor, not a Mortgage Order Taker".

Benefits of Using a Mortgage Broker

1. Access to a Wide Range of Lenders: Mortgage?brokers?work?with?many?lenders,?that?is?to?say?they?have?access?to?a?much?wider?range?of?household?loan?products?than?you?would?if?you?went directly to your bank or credit union.
2. Expert Guidance and Advice: A mortgage broker is a highly-trained professional who can offer you expert guidance and advice throughout the home loan process. They can help you understand the different types of home loans available and can provide you with personalized advice based on your specific financial situation.
3. Save Time and Hassle: Working with a mortgage broker can save you a lot of time and hassle. Rather than having to fill out numerous loan applications and deal with multiple lenders, your broker will take care of everything for you.
4. Negotiating Power: Mortgage brokers have negotiating power with lenders that individuals do not. They can use their experience and expertise to negotiate favorable loan terms and rates on your behalf. Remember, wholesale lenders are competing for their business.
5. Save Money: A mortgage broker can help you save money by finding the best loan products and rates available. This can add up to significant savings over the life of your home loan.
6. Personalized Service: A mortgage broker provides personalized service to each client. They take the time to understand your unique financial situation, your goals and work with you to find a loan product that best meets your needs and puts you on the path to achieving your future goals.
7. Better Chance of Approval: Because mortgage brokers work with multiple lenders, they can often find a loan product that will work for clients who may have been turned down by their bank.
8. Transparency: A mortgage broker will provide you with all the information you need to make an informed decision about your home loan. They will explain all of the loan terms and conditions in plain language, so you know exactly what you are getting into.
9. Follow-up Support: A mortgage broker will continue to provide support and advice throughout the life of your home loan. They can help you navigate any changes in your financial situation and ensure that you are always getting the best possible deal.
10. Peace of Mind: Perhaps the greatest benefit of working with a mortgage broker is the peace of mind that comes with knowing that you have an experienced professional on your side throughout the home loan process. You can rest easy knowing that your mortgage broker is working hard to secure the best possible loan product and rate for your needs.

*Now keep in mind, not all mortgage brokers are created equal. It's important to ask questions, get to know, and get referrals before settling with a mortgage broker.

Busting Mortgage Broker Myths

Myth #1: One of the biggest myths about using a mortgage broker is that they do not have control of the underwriting process. Many retail lenders and banks claim this because they have employees that underwrite the file whereas a mortgage broker works directly with the end investor to underwrite the file.

Retailers claim they can go directly to the underwriter and have them clear any unusual conditions however the retail underwriters are typically more cautious because they have to underwrite to the end investor’s standards and sell the mortgage to them after closing. If they make a mistake, the end investor may refuse to purchase the loan.

Mortgage brokers have a choice on which bank or end investor they want to send their loans to. If one does a poor job by not clearing the loan quickly, the mortgage broker may choose to no longer do business with them. This forces underwriters to remain accountable and nimble on clearing conditions.

If a retail loan officer at a bank or direct lender is having difficulties clearing the conditions on their loan, they have no other options because they are held captive to their underwriter which is the only option they have.

Myth #2: The second myth about using a mortgage broker is that they take longer than a retail lender or a bank. According to the January 2019?Ellie Mae Mortgage Origination Survey?of many major banks and lenders, the average time to close a mortgage is 45 days!

Using a mortgage broker, the average closing time is 21 days which is less than half of the retails and bank lenders. Taking over 30 days to close a loan with a mortgage broker would be uncommon or the result of 3rd party issue.

Mortgage brokers operate more quickly because all they do is mortgage loans. While banks may have other services such as auto loans, credit cards, and checking accounts, these are distractions from closing mortgages quickly!

Myth #3: The third mortgage broker myth is that mortgage brokers cost more than banks and retail lenders. This could not be further from the truth!

On average, all borrowers working with a mortgage broker saved 2.56% on home loans in 2021 while all low-income borrowers saved 2.94%.

Mortgage brokers have access to the lowest rates in the mortgage industry. As a mortgage broker, we receive wholesale rates from the end investors. Generally speaking, mortgage brokers have low overhead and thinner margins which allows them to pass huge savings on to their clients. Lower costs and overhead result in lower than average rates.

Lastly, mortgage brokers often control their commissions. I personally do not suggest ANYBODY lowering their commission, but sometimes it can be necessary to compete.

Conclusion

With mortgage rates on the rise, consumers are becoming more aware of the high rates and fees that are charged by large retail lenders and banks. By simply getting a 2nd quote from a mortgage broker, a client could save thousands of dollars on the upfront costs of their mortgage and tens of thousands of dollars over the life of their loan by getting a lower interest rate. So, if you're looking for an "order taker" that has one lending option, talk to your bank or credit union. If you'd like to work with a true "mortgage advisor" who has access to 200+ wholesale lenders, solutions for just about any scenario, and who will work with you for a lifetime, give me a call. I'm happy to help and you'll be in the best hands!

Gene Griffin, Senior Mortgage Advisor (NMLS # 2234848)

Phone: (512) 517-9822

Email: [email protected]

Summit Mortgage Solutions