questions about how mortgage brokers work
Hello, I’ve read previous threads on mortgage brokers, but still have a few questions about using them as opposed to going directly through banks. It’s common to shop around for the best rates when going directly to banks. Is it standard practice to do the same with brokers, or do you typically need to “sign on” with one broker who you are working with at the start? I was also wondering how are they compensated? Is it a straight forward fee-based system, or do they also receive more comission for selling you a higher rate? Finally, what would you say the advantage of going with a broker might be? Can they get you a lower rate? A bigger loan? Is it a faster process? Thank you!
gemby
in Mortgage 12 years and 4 months ago
10
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curiositykilledthecat | 12 years and 3 months ago
The broker we like is Nathan Perstein at First Meridian (Park Slope, 7th Ave and 9th Street). (718) 377-7900 Good luck!
gemby | 12 years and 3 months ago
Hi all, Thanks for your perspectives on this, it is very helpful. It sounds like it would be beneficial to reach out to a broker or brokers. Curiositykilled the cat is correct, I am looking into mortgages for purchase not refi. I’m just at the very beginning stages of looking but I figure researching the finance side is just as important as the property search. Thanks again.
vthatcher | 12 years and 3 months ago
PS my contact info is in the directory if you would like to chat .
vthatcher | 12 years and 3 months ago
I am a mortgage broker, here’s the difference . Using a broker opens up a variety of lenders, guidelines and options . Not all banks will finance every scenario and a good broKer will know where to place it . The process is usually less than a month and the rates are better than you can get at a a bank if you deal with an honest broker .
vthatcher | 12 years and 3 months ago
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brokelin | 12 years and 3 months ago
Just shop around. Shop different brokers, ones recommended to be trustworthy, obviously. Small brokers will work with fewer banks and have fewer options to offer you; in my experience, larger broker shops have more connections and can offer you more options, which equals better rates. Essential to use a broker to find out about different options if what you are buying or refinancing is a coop or condo in a small building, or if you aren’t putting much down, or if there is anything else odd about your mortgage that makes it not cookie-cutter – brokers will have options with banks that are portfolio lenders, meaning they don’t sell your loan to Fannie or Freddie, but hold the loan indefinitely, and thus have their own underwriting standards, which can differ (in a way favorable to you, if needed) from the standards set by Fannie and Freddie that many lenders who sell to them will be following.
curiositykilledthecat | 12 years and 4 months ago
I am not clear the the OP is looking to refinance–I actually assumed a purchase. In any case, to each his own (obviously), but all told, we have purchased 3 properties, and we’ve refinanced two of them. That is a total of 5 mortgages=two traditionally through banks, 3 through a broker. Going forward, we will always use a broker. Yes, they are a middle man, but as such have access to many more mortgage options (Chase, for example, has one interest rate they will offer to you at any given time… a mortgage broker has access to many banks and their respective competative deals at a given point in time). In my refinance example, above, our broker got us a better rate than Chase was selling, closed the deal, and the bank that orginated the loan sold it back to…. wait for it…. Chase. The amount we are saving in interest over the life of the loan *far exceeds* the fees we paid to the broker to get us the deal.
webby1000 | 12 years and 4 months ago
I kind of disagree with the previous post. Since you already have your place, and are not bound to a sales contract which could expire, I would just be patient and ride out the bank process. The mortgage broker is, at the end of the day, a middle man. He is another person that has to be paid. They also tend to hide fees that pop up right before the closing. You can refi with another bank too, without using a mortgage broker. Either way, make sure you get all your closing costs on paper for the refi.
gemby | 12 years and 4 months ago
thanks for sharing your experience. this is helpful.
curiositykilledthecat | 12 years and 4 months ago
Several years ago, we wanted to refinance our two mortgages (thinking “interest rates can’t get any lower”–ha! preparing to refinance AGAIN). Anyhow, our primary residence was really straight forward, so we planned to just refinance through Chase, who already held that mortgage. Absurdly slow and unresponsive and (no offense) government office-like.
For the investment property, which is more complicated, we knew we’d go with the mortgage broker we worked with on the purchase. He’s agile, quick, creative. Turns out, Chase was so annoying, we had our broker refinance the primary residence, too. We were done with both within a month. There is more nuance to a number of your questions that I will leave the experts to answer. But the short version is that a mortgage broker has very specific, monetary incentive to close deals–they are paid a nice fee when every deal closes. And they have motive to keep clients happy–they build their business on repeat customers and word-of-mouth. The schlub at [fill in big bank name here] does not have these motivations. In our experience, their performance reflects that fact.