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February 26, 2008
Mortgage brokers
Risking giving some the opportunity to rant, I'd like to raise the question of mortgage brokers. I'm a little confused about the variation in their fees and payment methods. Some charge fees and some say they'll be paid by the lender and some seem to get both. Opinions? Advice?
Comments
Yes, I'd also like to hear about this from those who know more. I ended up paying the mortgage broker 1 point directly with a check (weeks before closing, even in a separate tax year than that of the January closing), but I never felt right about that afterwards (what if the coop board had turned me down? - I don't know if the money would have been refunded.) Wonder if he got paid twice (by me and by the bank.)
And to those of you who will say use banks, not brokers, it was difficult to even find out which few banks will lend on a 4-unit coop with only 10% down (even long before the mortgage cisis, as my purchase was.)
Posted by: guest at February 26, 2008 3:42 PM
I used a bank to buy my coop. Find out who the coop did the UCC filing and incorporation with originally. Find out who the coop's underlying mortgage is with. Odds are that either of those two banks will underwrite your mortgage. Also- ask the seller who they financed with. I used citimortgage. Not the best rate on the street, but they were willing to take on my three unit coop. I think this is where the brokers are helpful- in that they'll find you a lender and a good rate.
I didn't think it was common practice for the broker to demand points. I thought they get paide by you (for the app fee) and also by the lender for brining business. I'm using Universal Mortgage for my new mortgage. So far, so good-- but I haven't closed yet. They seem straighforward, and they've been helpful finding me a good rate, and as far as I know, there aren't any hidden fees.
Posted by: Park Place at February 26, 2008 3:50 PM
Park Place, why should they get paid twice?
Posted by: guest at February 26, 2008 3:55 PM
When you pay a broker and application fee do you have to then pay another application fee to the bank they get a good rate from? Do you get the fee back if they can't find you a mortgage you qualify for at a rate you think is acceptable?
Posted by: guest at February 26, 2008 3:57 PM
Actually, I'd be surprised if the bank holding the underlying coop mortgage in a small building would lend again. I always heard that they don't want to have multiple risk on a small building (so, if your upstairs neighbor has a mortgage from a bank, they won't lend to you.) I could be wrong - the underlying mortgage is from the commercial lending group of the bank, not the residential, so they may have different rules.
Asking the seller - I like that idea. Have to remember that - never occurred to me then.
Posted by: guest at February 26, 2008 4:03 PM
The buyer shouldn't have to pay twice- sorry if my post wasn't clear.
You should only pay one app fee, whether you're going through a broker or directly with the bank. I think you probably pay a little more with a broker, but I don't know. My first mortgage had the app fee waived by the bank. My current appliciation definitely cost me.
I think that because the brokers generate a pipeline of business for the lenders, they must make money back from the banks too, but the theory is that they also get access to rates that are better than the consumer can get themselves.
Posted by: Park Place at February 26, 2008 4:04 PM
I've always wondered if real estate agents get a kickback for referring you to mortgage brokers (and inspectors). Anyone know?
Posted by: guest at February 26, 2008 4:12 PM
I'm curious about this as well. Application fees are approx $300-$400 and some banks/mortgage brokers even waive that fee, so how do the brokers themselves get compensated?
Posted by: guest at February 26, 2008 4:32 PM
4:12 - Yes they definately do. They wont tell you that and will deny it becuase it is illegal and unethical, but they definately get referral fees, or other "Perks", otherwise what incentive would they have to refer one broker over another.
Ive even dealt with real estate brokers that have stacks of the mortgage brokers business cards that they hand out.
Rule of thumb - NEVER use the mortgage broker the agent recommends.
Posted by: guest at February 26, 2008 4:33 PM
Ask The What - Im sure he will tell you all about it...
Posted by: guest at February 26, 2008 4:34 PM
"I've always wondered if real estate agents get a kickback for referring you to mortgage brokers (and inspectors). Anyone know?"
You don't need to assume they get cash back. It makes business sense for them to have someone getting the mortgage done. It limits the time they have to put in and paperwork they have to complete especially for first time buyers. The more pros they bring in the faster the deals get closed. They make more money that way without having to take a direct cut.
Posted by: guest at February 26, 2008 4:51 PM
Thanks Broker at 4:51 - But many of us already know the under the table deals that go on between Brokers.
Maybe they all dont - but MANY MANY do.
Posted by: guest at February 26, 2008 5:06 PM
5:06 I work in finance and clients are always asking for recommendations for accountants and insurance agents and lawyers. People who are professional need to give referrals because they get asked for them. It also helps you build your business through reciprocity, but nobody is going to lose their license just for your a cut of your pathetic mortgage.
I have had real estate brokers tell me there are several major major mortgage brokers to choose from. They are clearly not getting a kick back.
Get a new job and stop being so bitter you can't make money like these hard working professionals who know how to network and build a legitimate business.
Posted by: guest at February 26, 2008 5:46 PM
Great 5:46 - I am an accountant and have been asked by clients who are Brokers what to do about kickbacks and other "gifts" they receive. I also see alot of "New Business Fees" (Code=Kickback) etc. in the general ledger of some mortgage brokers.
"Get a new job and stop being so bitter you can't make money like these hard working professionals who know how to network and build a legitimate business."
This tells me you are a broker, or married to one, or "Married" to one.
Posted by: guest at February 26, 2008 6:38 PM
Why does "new business fee" mean it's a kickback from a realtor? Maybe these are the fees from the bank for bringing in the business. This is what Park Place mentioned.
Posted by: guest at February 26, 2008 7:10 PM
If they are an expense to the mortgage broker it is definately not a fee from the bank, which would be income to the broker,it is a fee from the broker to an agent for bringing in the business - 2 totally different things.
Posted by: guest at February 26, 2008 8:28 PM
I am a banker/broker. We get paid though points upfront or in the rate or both. My rates are better than a bank and my fees are the lowest. On a zero point loan I can make money and still provide a better rate than a bank. At a slightly higher rate I can pay some of your fees like appraisal, ect. I can also get your mortgage tax waived if you currently have mortgage and are buying real property.
Posted by: guest at March 1, 2008 6:12 PM
You are a moron thebrownest - if you had any idea you'd realise that any reputable mortgage broker would not be charging you but taking the amortising fee from the bank over the life of the loan.
People like you should stick to swinging a hammer and trying to avoid hitting yourself in the head (again)
Posted by: Casey54 at March 1, 2008 10:45 PM
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