Mortgage Brokers & Banks
I’m in the process of securing a 30Y mortgage for a new purchase, and have found one mort. broker who is coming in at 3/8 of a percent lower than others–albeit with attached fees of $3400. Obviously if I could figure out which bank he is going through, I could conceivably cut the fees out–and…
I’m in the process of securing a 30Y mortgage for a new purchase, and have found one mort. broker who is coming in at 3/8 of a percent lower than others–albeit with attached fees of $3400. Obviously if I could figure out which bank he is going through, I could conceivably cut the fees out–and boy would I love to that.
Any idea what bank it might be? (He said it’s not JPMorgan or Citi–but I can’t figure out who it is (it’s not Commerce either): Apple, BoNY, North Fork, ING? If you have any idea, would love to know.
To answer the question.
I am a broker myself and in most cases I can offer a customer better rates from a bank (i.e. Countrywide, Citi Mortgage, Chase or Bank of America) due to the fact we are selling wholesale rates not retail rates. On top of that most lenders offer brokers incentives which allow us to lower interest rates even further. Another important thing to remember is that some of the lenders brokers use are not available to the public. The most important thing to obtain from the broker is a Good Faith Estimate and a Rate lock confirmation. The GFE should show you where the extra $3,400 in fees are going. If the fees are in the Broker Fee section you are paying that directly to the broker (he/she is either giving you the par interest rate (where they make $0 from the lender and are charging you directly) or they are taking a portion of that money and paying a portion to the lender to buy your rate down). The correct proceedure would be to show you how much you are paying for a loan discount fee (buying down your interest rate) and Broker fee/Origination fee (how much the broker is making). For a free evaluation of your Good Faith please email me and I will gladly explain.
Good Luck in your decision process.
If your broker will not tell you what bank the mortgage is through, then it’s time to find another broker.
Also, don’t think you can necessarily get a better rate from dealing with the bank directly. A GOOD broker can save you money aas they have access to differnet rates than you.
Penny wise, pound stupid
To the original poster:
I would like to answer your question but I’ve tried to post a reply twice and it’s not sticking.
If you e-mail me and let me know you’re still interested, I’ll give you a thorough reply. And absolutely no solicitations- just the truth.
Goodluck
I’d like to shed some light on the questions raised in the above posts.
To the original poster: It sounds like you’re buying down the rate with that $3,400 and then some. I would need to know the loan amount to know exactly what you’re being charged. Chances are that the $3400 probably isn’t all you’re paying. Brokers pay wholesale prices for the rate and then raise the rate to pay themselves. No matter what it looks like, the lender NEVER pays the broker!! It’s a misconception that is cleverly peddled as truth by brokers. You pay the broker in the form of a higher rate! In turn, the lender pays the broker up front for the additional income they’ll receive over the life of the loan.
You could go straight to the bank and buy down the rate with that $3,400 AND pay significantly lower fees overall.
The average broker is going to charge you $1000 in fees. That does not include the lender’s fees. For example, the broker may charge a processing fee, commitment fee, application fee etc. After that the lender will most likely charge another $500 or more for underwriting and credit report fees. The lender fees will normally not be represented until the final HUD you’ll see at closing and often do not appear on the good faith estimate.
The second point you brought up about going to the bank directly is a good idea but not necessarily for the reasons you think. The best reason to go to the bank is disclosure and transparency. The bank’s representatives are held to a higher standard, legally and by the bank itself.
If you’re going to the bank in search of obtaining the lower rate, it’s not going to happen. Brokers get wholesale rates from lenders so even if you know that your broker is using, say HSBC, the same rate isn’t necessarily available to you.
What most people don’t know is that bankers can act as brokers, too. Even though my bank funds its own loans, about once a month I use another lender to better meet my client’s needs. Some banks will not allow this but you may find one that will.
For 3/8 of a point, you’re better off finding someone who returns your calls and does what they say they’re going to do. Like I said, without knowing your particular situation- especially the loan amount- I can’t tell you what this guy is doing. But if it sounds too good to be true…
Be more than careful, I would advise you to go with someone you like and forget the 3/8 of a point.
It’ll be too costly in the end.
Good luck whatever you decide.
I presently work at a bank but started out working for brokers. Just wanted to comment on the above to help shed light on what may seem a mystery.
To address the first post- the broker isn’t going to the bank like your or I would to get your loan. They are going to the lender (most banks have wholesale divisions although some don’t) to get your mortgage at wholesale prices. The lender doesn’t pay the broker- EVER. No matter what it looks like, you pay the broker in the form of points or in the form of a higher rate. If you have ever used a “buy down” to lower the rate, the principle is the same except one would raise the rate to pay the broker (PYA).
Without knowing your loan amount, it’s hard to say how much you’re really paying the broker and lender.
If you’re going to be paying $3,400 you may be better off going to a bank and using that money to “buy-down” the rate.
The benefit of using a bank is that there are usually lower fees- the bank I work with only charges $395 in total fees (processing, application, commitment, underwriting, credit report etc). The average broker charges $1000.
With a bank, you can usually see their 30 year fixed rates online- when you call up they’re usually a little different- lower or higher- depending on the program and how the market is doing.
Anon@2:45pm, if you want to cut out the middle man, go to the bank directly. All banks have the same rates within a range on any given day. Compare total fees to total fees. Consider whether or not the bank requires any money up front (illegal to ask for non-refundable money without a commitment from the bank). Also consider the service you’re getting from your loan officer. Do they return your calls? Do they do what they say they’re going to do?
If you have a good mortgage banker, they’ll handle your situation on a case-by-case basis. WHen I have a loan that my bank won’t fund, I act as the broker and go to another lender who will fund the loan. And your loan officer, no matter a banker or a broker, should be handling the paperwork for you. Know the difference between someone who’s just taking your application and someone who is working for their money!
Good luck and feel free to contact with any questions.
I see that bank of america offers competitive rates without fees (not sure what those fees are, but it could be a good deal). I always go straight to a bank when securing a mortgage. although a mortgage broker is advocating on your behalf and handling much of the paperwork, they are getting paid somehow, and it usually trickles down to the individual whether that is a higher rate, fees, etc.
A little more digging reveals that the rates may be from a few web-based brokers (found through Lending Tree) two of which, MortgageIT and IPI Skyscraper are really the same company. The other two are WCS LEnding and Mortgage Line. So far, rates are lower; we’ll see what the deal is w/ fees. Will report back.
Try Countrywide they seem to offer low rates –