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Why hiring a mortgage broker vs. working with a direct lender makes sense in today’s market

Submitted by on May 20, 2010 – 1:44 PM2 Comments

Why hiring a mortgage broker vs. working with a direct lender makes sense in today’s market!

As provided by the fine folks at Guarantee Mortgage (my comments are in red):

1.  Mortgage Brokers are trained to find niches .. Saving you TIME and MONEY!

2.  Brokers are driven to find you the best rate, your bank’s goal is to provide another service to your client.. I.e. checking, savings, credit cards.  This translates to better customer service for you from start to finish.  Mortgage broker’s (& Realtors for that matter) rely on referrals which happens only if they do an excellent job for the client.  Mortgage brokers are working on a different level than banks.

3.  Many brokers will work nights and weekends … banks don’t. 

This is one of the KEY concerns I have when a client chooses to work with a bank. (Side note, it’s also really important to work with a local bank/broker who is familiar with the nuances/quirks of San Francisco real estate).

Real estate can be a 24/7 industry & a fast paced one at that especially if there are offer deadlines to deal with!   It’s not uncommon for me to be working with a client at midnight or during “non-banking hours” putting together an offer.

A pre-approval letter specific for the property is included with an offer along with loan terms (interest rates, points,etc. are written into the purchase contract); information that is provided by your loan person who hopefully works “non-banker” hours.

It’s peace of mind knowing that your loan person is going to be available for you during the time sensitive steps that are part of the purchase process.

4.  Access to loan programs-brokers give you more access to more loans than direct lenders. Translation, better loans for the borrowers.  Brokers shop the market and find consumers the best product for their particular needs. They shop banks, trust companies, credit unions and finance companies.

6.  Reaction to market conditions– Interest rates change daily. Brokers can start a loan with one lender and switch to another lender if the rates improve.  This is another CRITICAL difference in working with a mortgage broker!

As both a listing agent and buyer’s agent, I’ve had many transactions where a switch was made to another lender after the buyer was in contract on a property.  It becomes a real stress test if dealing with a direct lender rather then a mortgage broker since the whole mortgage application has to be started again by the buyer which typically causes escrow delays not to mention extra fees if the buyers has to pay for a second appraisal.

My recommendation to any buyer based on this frequent experience is to save yourself the stress and streamline the process by working with a mortgage broker or at least double appn’g with both a mortgage broker and direct lender otherwise you really risk losing the house that you are in contract on especially if the seller has a back up buyer who can meet contingency time frames in a timely manner.

7.  Brokers are paid by lenders, not by borrowers. Direct lenders and Mortgage Banks give brokers wholesale rates. Brokers make their money by turning that rate into a retail rate.

8. Brokers can be more flexible than banks.

9. Brokers are not compensated until the loan closes. Borrowers pay nothing for their services if they don’t close the loan.  Depending on what phase of the purchase a buyer is in, there may be an appraisal cost which is typically paid up front.

10. A broker deals only in mortgages. By blending professional experience with access to many different wholesale lenders, they give the consumer the most efficient and cost-effective method of getting home financing while still receiving individualized attention tailor to their needs. 

It’s always a good thing to have your hired professional 100% focused on you!

If you need a recommendation to reputable mortgage brokers that my clients have been  happy working with, please shoot me an email.

Related Posts: Dear Big Box Lender, I am deleting all of your related posts from my blog & will be giving any clients considering you for a loan/services a reality check

Posted by:

Cheryl Bower, Realtor , GRI, ABR
Cell 415.999.3450
DRE #: 01505551

Skype: cherylbowersf
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  • Hi Cheryl,

    Thanks for your vote of confidence regarding mortgage brokers. As you know, I am one of the mortgage brokers on the Zephyr team and we really love working with Zephyr agents because they are so well-informed and professional. Not to mention enthusiastic about what they do.

    I would like to add a little story about the benefits of working with a mortgage broker versus a big box bank. One night I woke up at about 4:00 a.m. in a sweat about one of my transactions. My mind was racing about how to deal with this particular situation. As I get out of bed, turned on my computer and began frantically working my client’s ratios again, I had a eureka moment: “Wow, the loan officers at B of A are not waking up in the middle of the night worrying about their transactions! It’s only the crazy mortgage brokers who do this sort of thing. The Bank people get paid regardless of whether a loan closes or not, and it one transaction doesn’t work out, their butts are not on the line the way mine is.”

    Anyway, in that moment I realized one of those intangible benefits I offer: I will actually lose sleep in order to make my clients happy and get the job done.

  • Cheryl Bower says:

    Hi Natasha,

    keep up the great work!