Has anyone got a loan via a broker ? What are the negs. & pos. of going through a broker ? Do they charge you higher fees? interest ?
In the last year I got half of my loans from banks and half through mortgage brokers, three from each.
Recently, the best deals for me have been through Bank of America Mortgage. With a middle score in the 740’s (720’s would probably also work), they quite often don’t document income. This means that you get a stated income loan at full doc rates. This particular loan is owner occupied, but my wife got a lot loan a few months ago and hers worked the same way.
I will break my answer down into three bullets. In my experience:
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Mortgage brokers may be better with lower FICO scores and unusual circumstances. They have many products from many sources.
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Mortgage bankers may be better if you have higher scores and relationships with the bank.
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A local bank is better for unique situations. For example I bought a home on two acres and then subdivided the parcel into three lots. The local bank agreed before I bought the property to keep the loan in house and let me keep a portion of profits as I sold the 3 pieces seperately. A mortgage servicing company will not let you do that.
YMMV on all of this. Bottom line, it pays to shop and negotiate.
Most good mortgage companies set up a banking relationship for their best customers. In general, you get the best rates with a banker. However, there are so many niche lenders out there and very very few people have perfect credit or want to put down 20% etc, it is almost a necessity to have broker sources.
As a loan officer, you try to build a relationship with a realtor for your leads. If you constantly tell them, I can’t do this or that, they will have to make another phone call and call someone else. As a sales person, the last thing you want is to have your clients talking to other salesmen.
In the case of mortgage lending, bigger is better. B of A, Wells Fargo, WaMu and Countrywide all have excellent rates. They give their best brokers the same rates because brokers get the bulk of the realtor business. Note, I did not sale all brokers get the same as their in-house staff.
Dave is right. The market is becoming so fragmented for those in less than perfect scenarios. There are numerous lenders who have their own special niches for investment property, low credit score, bankruptcy, etc. The only way that a consumer can gain access to most of them is through a broker.
The prime lenders offer some discounted rates to brokers as the overhead is less for them.
Just to add a little bit, I am lucky enough to work for the largest mortgage company in San Diego. We have our own banking relationship with a company nobody has ever heard of that provides us with great rates.
At the same time, we have “big broker status” with WaMu, B of A, Wells and Countrywide assuring us the same rates as their in-house people. I priced a loan today for an investor with 840 credit scores on a 4 plex. 4plxs are harder to get good loans on than say a single family or duplex. Don’t ask me why.
A niche broker offered me 6.875% for a 75% first and 12.5% for a 25% 2nd. Thats 100% financing on a 4 plex, stated income verified assets. Most of my big broker arrangements would match the 1st but not allow a 2nd. They demand the buyer come in with 25% down. The offer of 100% financing is so good, my client doesn’t believe me. He has the 25% down to avoid a 12.5% 2nd, but he is now thinking he can buy a 2nd property with that down and get this one for only closing costs.
The question now becomes can he raise rents enough to cover the fixed payment while the property appreciates.
If he gets the property a little cheaper can he roll the closing costs into the loan and get it for no money out of pocket?
I would have to say that if you are “well qualified” (720 fico- 38% d/r- 20% cash) then your first
call should be to your local bank. They will most likely have the best loan options for you.
If you do not have well qualified status you should get with a major brokerage office that deals
heavily in investment lending. large brokers can have over 100 different lenders to pursue in
funding your loan.