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Refinancing Your Home – Broker Vs Bank

Having come from a wholesale lending background and having to work with mortgage brokers, I developed a soft spot for them. Much of what has happened in the economy today with the real estate meltdown has been blamed on them. Do I think that is fair? Well, they are not completely innocent, but let’s not forget banks where offering these products, Wall Street was then buying these loans….and the simple thing many forget….people were signing the paperwork to get into these loans. Blame can be spread all around. Which is why borrowers today are so wary of who to work with. Here is a simple breakdown for people:

Bank Vs Broker

Mortgage Broker Pros:

- Signed up with several banks and most times can offer a better rate than the average bank since they can lock rates with whatever bank is buying the market that particular day.
- Have to disclose all fees to borrowers (including what the bank is paying them on whatever rate they have sold borrower on).
- Now, in most states, brokers have to be licensed to solicit borrowers and to be able to have the title of mortgage broker.

Bank Pros:

- Rates set, no “selling” on their end. Rate is what it is.
- Dealing with one institution instead of having to deal with a go between.
- Process is much more streamlined. Additional fees brokers charge not involved.

Now, my cons list is somewhat based on personal views as well as fact. Take that for what it is worth and know that going in.

Cons:

Mortgage Brokers

- Typically commissioned employees whose income depends on a sale. Thus higher rates might typically be sold.
- Usually given a minimum fees requirement by management where they are unable to downsell rate as much as they should be able to.
- Process not as streamlined, no control over banks turn times, etc
- Do not have final say when it comes to ultimately deciding on a loan (appeal process is not easy)

Banks

- Do not have to disclose all fees
- If working for a federally licensed bank, employees do not have to be licensed to sell mortgages (lack of knowledge, expertise in industry could be questioned).

As you can see, in keeping this brief, there are advantages and disadvantages to both. The end result is ultimately up to you, the consumer, on what you are most comfortable with. Now, with anything, I would recommend doing your own research before jumping into a relationship with any one bank or any one broker. Everyone has a person they can probably recommend. “Use my guy, he’s the best!” While that might be the case, and that might give someone a leg up…still always do your research. Your home is your biggest possession and that should not be taken lightly. You are entrusting your biggest asset to potentially a stranger.

If you would like to find out more information, or get in depth information,

Tim Wheeler has a background in wholesale lending as well as mortgage banking and mortgage brokering. He has been successfully involved with several multi-level marketing (MLM’s) companies and has done reviews on several MLM’s that are out there now. His goals now involve helping people make informed decisions and showing them the right way to make financial decisions. To learn more about what Tim does, please visit: http://backtobusinessbasics.com

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