I've read a lot about the subject of who it's better to get a loan through. Bankers or brokers? Here's my take on what makes the most sense. First of all, I'm a broker. Theoretically, a broker can work on the customer's behalf to find that perfect loan by shopping with a number of lenders. Of course these days the playing field has been diminished a bit so there aren't as many choices as before.
Bankers on the other hand claim they can get loans approved that brokers can't and loans can close quicker because everything is done in-house. I had a loan last year where I would have preferred to be a banker. It was an investment property and it closed a couple days late because the underwriting was being done in Minnesota. Now it's not unusual to have underwriting done out of state, even if you're a banker. I just think that if this particular loan had been underwritten closer to home, it would have closed on time.
Last year the Seattle Times did a story on banks and their rates. They found that banks usually had higher rates which countered the lower fees they usually charged. Cutting through all the hyperbole, the most important thing to remember is that bankers and brokers are going to make money. If you see a quote where there are no points, low or no fees and a low rate, be very careful. No one in our business is going to do a loan for free!
Some bankers claim they have the best of both worlds. They can either act as a bank or broker a loan to another lender. This is an attractive alternative for the customer. However, be wary of promises that can't be kept. I met a mortgage banker about a week ago at an event and he claimed that he could get loans done I couldn't because he had direct access to his own underwriter. That sounded great but, in this day and age of tight credit and fewer loan programs, didn't ring true. The other issue that they're working on is licensing everyone. Six states nationwide including mine require a license if you're a mortgage broker. There's also a push to have all bankers licensed as they're not now. Licensing would continue to clear out the undesirables; the ones who often aren't working in the customer's best interest.
The bottom line is you should work with someone you trust and can build a relationship with you. Whether it's banker or broker, take the time to get to know the person. Your home is the single biggest transaction most of you will ever do. All the more reason to choose wisely. Have a great day!
Paul
Paul McFadden
As usual, great info, Paul...Ease within a relationship is key, but also keep in mind BROKERS CAN GO TO MANY DIFFERENT LENDERS TO GET THE BEST RATES, PROGRAMS, ETC. FOR THE CLIENT. People are shopping rate more than usual these days...
Thanks, Joan, for your thoughts. I like being a broker for the reasons you stated above. Plus, I like being an advocate for my client. Talk to you soon!
Paul
I recently made the switch from a broker to a broker/banker, and I have to say that I do love being a banker. While I don't have 'direct access to the underwriter', all banks have niche products that they can offer that others can't. And it's nice being on the 'inside' of one of those product niches (which as you accurately explained, are going away at an alarming rate!). At the same time, I can broker if I choose to based on the clients needs, be it cost, time, rate, etc.
I think the key is (and this is true no matter where you work) is to intelligently identify the pros and cons of the set up, understand how making a change can best benefit your clients and referral network and then once you make the decision don't look back! In addition, a lot of banker relationships charge outlandish fees if you broker a loan out. Fortunately, my company has a very reasonable fee that I am more than willing to pay for if it means getting my clients a better loan.
Ultimately though, it's a matter of opinion, and the important thing is to enjoy what you're doing and where you work!
Thanks, Eric. Keep me posted how you like it. Thanks for your comment!
Paul
Bankers vs. Broker. Hmmm! I like the question. Bankers fund their own loans, have underwriters in house and fund their own loans. Brokers are limited in their control over the complete transaction. For, what it's worth, working as a broker is easier. Ultimately I agree, finding somebody you can trust is the best advice.
Thanx for raising the question!
Thanks, Kirk. I'm a broker for now but always interested in what makes more sense. Take care.
Paul
..."The bottom line is you should work with someone you trust and can build a relationship with you. Whether it's banker or broker, take the time to get to know the person. Your home is the single biggest transaction most of you will ever do. All the more reason to choose wisely. Have a great day!"...
This last sentence is what is most important as a client. Broker, banker, etc..the client has to trust you. I have been a broker once before, and will admit that I like being a banker. As crazy as it sounds, there are many times we will have loans that are not available to the broker. Not all wholesale bankers will allow all loans to be available.
Before our Wholesale division shut down there we had loans that were available only with direct lending and retail.
It has its pluses and minuses...but it all comes down to the client.
PS...in today's market banks and brokers rates are getting very close.
Jason: Thank you. I'm a broker for now but you never know! Take care.
Paul
Thank you Jason for your comments! I currently work for a bank; however have worked for a broker, and a correspondent lender/mortgage banker and the truth of the matter is we are all not THAT different. It all comes down to relationships, doing what you say your going to do when you say your going to do it; trust your lender! The competition is getting tighter and we are all being held to a high standard; which in my opinion is about time! Gone are the days of the niche products to set us apart from the rest. It all boils down to service, service, service and price. Leaving the best for last!
Debbie
Of course, If you're a Banker and your Warehouse / Correspondent Line dries up overnight as so many did recently, having an U/W at the next desk over is irrelevant. You can't close what you can't fund. Many Bankers / Lenders closed their doors because of this very issue.
Now as a Broker, it may cause us some turmoil if our Lender collapses, but we can quickly shift the loan to another Lender and get it done.
Thanks, Debbie. I think right now it's tough for everyone as we just don't have alot of product to sell. I expect that to change within a year or so whicg will be great. Take care.
Wayne: Thanks for the info. It seems these days that bankers and brokers are not that far apart. Again, most of the sentiments seem to be that it's all about service and relationships. That's as it should be. Take care.
Paul
I came from the Broker side and switched to a commercial Bank. I perfer a Bank to a Broker. We have some great Niche products and we are also service 95% of our loans as well. Customer service is very important to us. The clients are always first.
I worked for a broker for my first year in the business. From there I went to the banker (correspondent) side. In all honesty, I am still amazed how much easier my life has become. While having an in house underwriter isn't the end-all, be all, it is a huge bonus, asset and timesaver. As a broker, I would always have conditions and depending on the lender, sometimes more than 10 (Can you say PF?). While it has only been a few months on the banking side, I have yet to have a condition on a loan after underwriting. I have to give a lot of credit to my processor, but this alone made the switch a huge value. Also, I am able to go from start to finish on a file in roughly 1/2 the time that I could before. Generally, my underwriter takes 1 day. Then add the flexibility of being able to broker loans if needed (although I haven't done it yet). And finally, the fact that there is no disclosure of YSP is an added plus. So from my limited perspective, having the best of both worlds is the only way to go.
Hi Nancy: Thanks for your feedback. It's great to hear about someone so committed to the customer. M&T rocks!
Thanks, Patrick. I appreciate it. that's what I've heard as well. I'm a loyal guy so have opted to stay put to date. Down the road, who knows. Take care.
Paul