mortgage broker vs. bank loan officer

Thanks, everyone, for your feedback. It sounds like we should just go ahead and get started with Wells Fargo since if we do go for a 203k we’re going to end up with them anyway. Good to know!

pacificist

in Mortgage 12 years and 9 months ago

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pacificist | 12 years and 9 months ago

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My husband and I are taking steps toward purchasing our first home with an FHA loan, possibly with a 203k component depending on the property. We would like to get a pre-approved for a mortgage and aren’t sure whether to speak with a mortgage broker or go directly to a bank. My first inclination is to speak with a broker, but a friend who recently purchased a home had a good experience with their loan officer from Wells Fargo. This forum seems to be pretty pro-broker, but I guess I’m just looking for someone to spell out the advantages/disadvantages of one over the other. I have two specific questions: a) does the fact that we plan to use FHA make any difference (fewer options; less benefit to “shopping around” with a broker?) and b) what can we expect to pay for a broker’s services and how does that usually work – e.g. is it rolled into the loan? paid separately in advance? etc. Thanks, folks!

jockdeboeraia | 12 years and 9 months ago

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Wells Fargo seems to be the most popular with my clients.  In fact, I am trying to remember someone with a 203k and a different company and can’t.  You will need a good HUD inspector and a contractor who does 203’s.

cate | 12 years and 9 months ago

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AFAIK, to get pre-qualified you have to go through a broker. This is free and there is no obligation. Also, AFAIK, if you are doing 203K, Wells Fargo is the only lender in NYC. Someone please correct me if I’m wrong about that. Brokers charge a set fee, set by government regulation, and it’s wrapped into the loan. It is all disclosed, and you do not pay up front. Banks make their money on the spread (difference) between what they pay to borrow and what they charge you. There is also a third type of lender that does both, and I would advise avoiding them. They make the loan, then turn around and sell it to someone else after the closing. They act as both broker and lender. They can delay and do other things to drive up fees and the mortgage rate, and the disclosure requirements are much looser.

reader718 | 12 years and 9 months ago

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Yes, they are called correspondent lenders, they many times call themselves mortgage bankers . In essence  they are brokers that can close in the name of their company, but many time you may be asked to sign multiple sets of documents in their name, the banks name etc. at the closing. THey are exempt from disclosing what their cut is from the lender, same as the bank in house mortgage consultants. This is completely  unlike us  brokers who are highly requlated in terms of disclosure. (not a bad thing, but the rules should be the same for all channels of loan orgination)