Mortgage Companies: Which one should I choose
What are the options?
There are a few choices when it comes to getting your mortgage, although not as many as in the past. This actually is a very good thing. The mortgage banks and brokers that are still in operation today are doing so because they are solid companies and have weathered the storm.
Essentially the choice comes down to two basic businesses. First there are banks. Banks, such as Wells Fargo, Bank of America, or Chase, just to name a few have home loan products to offer. They are very reputable companies and should offer competitive rates. There are also Mortgage Brokers, who are independent companies that source their loans from different investment banks.
The difference between a broker and a banker
The major difference between a broker and a banker are how the individuals make their money. Brokers work with investors and utilize very complex rate sheets to determine the rate and programs they offer. Bankers generally have a posted rate that the bank they work for is offering. Both obviously need to make money in order to stay in business, but the broker usually has greater control over how much money they make, or in some cases, how little they will work for.
Where as bankers don’t have the same control. The Bank dictates what it will make and sets the rate accordingly. When it comes to pricing I would give the mortgage broker the nod in terms of offering a better product.
Processing the loan
Loan processing is when you agree to the bank or broker, choose your program, and then start providing all the thousands of documents they request, also known as underwriting. Brokers, using several different investment banks tend fall short when it comes to loan processing. Brokers have to collect all the paperwork and send it the investor to be underwritten. As one can imagine, each investor has their own quirks about what is acceptable and what is not.
Some can be extremely easy, while others are extremely tough. Banks on the other hand, usually have a system in place to make the processing run smoothly. In addition, the banker tends to work with one or two underwriters so they have a great deal of knowledge as to what they will expect. In this case, the bank gets the nod for having the better product.
So in the end, if you are willing to drag the loan process out a bit and get a better rate, then take the broker, but if you want to avoid the head ache, the bank is the way to go.