Borrowers: Mortgage Broker or Direct Lender?


Well hi there, I’m Michael Hausam of The
Hausam Group at Vista Pacific Realty. So the question I want to address today is
whether you as a homebuyer or a mortgage borrower should use a mortgage broker or
a direct lender. What’s the best place to go to get a loan? Now as far as
definitions go, a direct lender is somebody, an institution, that’s lending
their own money; whether it’s a bank like Bank of America or Wells Fargo or Chase
or a mortgage banker, like Quicken Loans or Loan Depot. a mortgage broker is a
completely different animal ;that’s a third party intermediary, who’s basically
taking your loan package and taking it to a direct lender. So what’s the best
one to use? Well in my background, as I’ve mentioned before, I started out in the
real estate business on the mortgage lending side. I first worked for a
finance company, that was a division of an automotive company that made mortgage
loans; and then I went to work for a bank and then I work for two different
mortgage bankers, and now I can broker loans as a mortgage broker. So the quick
answer is: the best place to get a mortgage loan is through a mortgage
broker. ‘Cause that’s what I do! But as self-interested as that answer is,
it’s also the right one, as far as I’m concerned, because I have my license with
a mortgage broker because I want to be able to obtain the best possible
financing for my clients. But there are reasons for that. Consideration number
1: your profile. If you’ve got extremely good credit and your income and assets
are very simple, you can basically get a loan from anywhere. But if your
circumstance is more complicated, if your credit isn’t great, if your tax returns
are complicated or your employment is complicated or your assets are
complicated, then you might have a difficult time finding a direct lender
who will make that kind of loan. A mortgage broker will
have the experience and probably dozens of different avenues to take your loan.
So that’s the first consideration. Now the 2nd consideration is the type of
loan that you want. If you want to borrow six hundred and seventy nine thousand
six hundred and fifty dollars or less and you want a standard thirty-year
fixed-rate loan, that’s a Fannie Mae Freddie Mac agency loan, and everybody
makes those loans. But if the loan you want or the loan you need or the loan
that you qualify for doesn’t meet those requirements, it’s a little more
complicated. If you’ve got credit or asset or income issues, you’re probably
not going to be qualifying for a Fannie Mae or Freddie Mac loan. Nn that case it
may be difficult to find out which bank will make the loan for you. Also some
borrowers have extremely unique profiles as far as high net worth individuals, and
they want to cross collateralize brokerage accounts, other properties,
significant assets that they have and it takes a custom high-end private banker
to make those loans. I also had a circumstance recently where a borrower
tried to see if I could match a rate and quote given to them by their credit
union. Well at that time their credit union was offering a special promotion
for people that were in the ministry – the wife worked for a church – and a
different promotion for people in education and the husband was a teacher.
They also had a special credit with their credit union because of the time
that they’d been members of the credit union. Well the circumstances in that
situation were such that these borrowers got an amazing deal that wasn’t readily
available in the marketplace. Consideration number 4 is the
transaction itself. Where is the loan going to be handled? Maybe you’re not
aware and haven’t been paying attention to the mortgage business like I have
lately, but Wells Fargo and Bank of America and Chase have all announced a
ton of layoffs; they’re consolidating operations.
I just ran into this with a buddy of mine that had a really good relationship with
the lady at his local B of a branch. Well he was talking to her about getting
a loan, but it turns out that other than just taking the loan application itself,
a hundred percent of everything that was going to be done on his loan was handled
out of state. The people would’ve had no idea who he was and, more importantly, no idea
about what was going on here in Orange County real estate. The other issue that
came up with that loan is that this particular banker didn’t have any idea
what a conditional loan approval was. It’s something that I use in my real
estate business extensively and that’s the type of loan that you get a borrower
completely underwritten by a human underwriter; the loan is completely
approved before finding a house. Well, B of a won’t do that type of loan. They
would give a pre-qualification letter but they wouldn’t get anybody to sign
off on the loan. Well that has an impact on the transaction. So we ended up not
using Bank of America because they couldn’t help us the way that we needed
to be helped. Also another consideration is if you’re using a local mortgage bank
or local mortgage broker and the representative is right here in the
county, there’s some pressure that can be brought to that individual that wouldn’t
necessarily be the case if you just pick up the phone and talk to somebody way
off in Michigan at Quicken. Being a real estate agent (and I’m here at an open
house right now) it’s very common to have mortgage bankers and mortgage brokers
come in here to the open house to try to get business from me. Well can you
imagine if I’m in a transaction with one of those mortgage bankers or mortgage
brokers and something goes sideways, it’s not just that one transaction that
they’re gonna be thinking about. It’s all the other transactions that they’re
hoping that I’m going to send to them and you as a borrower can benefit from
that situation. Whereas if you’re on the phone to some
21 year old recent college graduate that’s got a headset in the cubicle
outside of Detroit and you’re one of seventy-five people and his pipeline,
your tragic circumstance or urgency isn’t gonna mean quite as much. And that
could impact you in your transaction Consideration number four is simply
costs. And let’s be honest ,when it comes down to it, the question that’s always
asked is not, “How good is your service and where is your processing center
located?” It’s, “What’s your rate and fees?” So let me give you a little bit of a
tutorial on how it works for mortgage bankers. Their loan officers are given
their rate sheet, “This is today’s rates and this is what you have to go out into
the marketplace with,” and if you’re dealing with one of those individuals,
they have their rate for the day and you get that opportunity, whereas with the
mortgage broker I’ll get 75 or 80 different lenders who
are all competing for my business. So what happens is they because they don’t
need to pay a loan officer and have office space and all that for a retail
branch, they’re delivering on a wholesale basis; so they deliver dramatically lower
rates to me as a mortgage broker and then I, seeing all of these different
lenders competing against one another, can figure out the loan for you and the
price for you, as these guys are all trying to fight it out. You then benefit;
so that’s one huge advantage that a mortgage broker has, is that at the click
of a button, literally the click of a button, they can do far more shopping
effectively then you can do picking up the phone calling all over town and
comparing rates. Now for my particular clients, what I do if I’m representing
you as a home buyer, I offer substantially discounted
origination fees; as for me the loan piece isn’t the way that I make my
living. The loan piece is the way that I make sure that my clients get the best
service, the best terms, and the best performance, so that their
transaction holds together. It’s absolutely impossible, other than in the
most unique of circumstances, that I can’t dramatically undercut the costs
and fees of any mortgage banker or mortgage broker for my real estate
clients. So if you’d like to learn more about that or if you’d like a simple
rate quote, you can call nine four nine four one three two three seventy one. You
can email me [email protected] also right above my head there should be
a little round button with an ‘i’ when you move the cursor; click on that and
that will take you to my website and you can get more information there, as well.
Lastly, please follow and subscribe to this youtube channel. I very regularly
do advice for borrowers, for home buyers, and home sellers; tips and other little
things to help make your real estate experience easier and happier. Thanks so
much for watching and have a great day!

One comment on “Borrowers: Mortgage Broker or Direct Lender?”

  1. arturo galindo says:

    Thank you so much im new in this huge world and i learn a lot today…….muchas gracias senor

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