Mortgage Brokers vs. Banks

  Even with the closings of many mortgage lenders, it feels as though they are still everywhere you look.  Retail mortgage shops, which are like bank branches, are seemingly in every strip mall and on every corner.  You can see their company name on billboards, commercials, and even on the sides of buses, but for all of their exposure, are retail shops where you can find the best deal for your mortgage?  No.

  Having to operate under their parent corporations' policies and perform at pre-determined levels leaves retail shops little room for flexibility and creativity.   Mortgage brokers, on the other hand, have much greater control over how they operate.  A broker sets their own rules and is not governed by a board of directors who demand that each loan produced brings in a certain amount of profit. 

  Because brokers operate as a sort of "freelance" representative for major lenders, they can offer clients loans at wholesale rates.  As an independent agent, the broker is also unburdened by having to work with only one company's products.  Some brokers work with 40-50 lenders in order to provide their clients with a vastly increased number of options. 

  Some retail shops do not offer VA loans.  Some do not offer USDA programs that will finance 100% of a home's purchase price.  Many lenders are now trying to push buyers into FHA loans, which are not always the best option for Delaware properties.  Others do not do loans on mobile homes.  A broker can do this and more. 

  Why go to ABC Mortgage Corporation's shop, get declined, go to XYZ Mortgage Corporation's shop, get declined, etc., when you can go to a broker who works with ABC, XYZ, and all of the others too?  It's like passing up the limited menu at a fancy restaurant in favor of the more economical and varied buffet.  The many options at a buffet cater to a greater number of diners, just like a broker.

  Another benefit of working with a mortgage broker is the flexibility to structure creative solutions to clients' needs.  For example, a business owner wants to refinance their commercial loan.  If this borrower were to go to a retail commercial lender, and obtain a new mortgage, they would be locked into commercial rates, which are substantially higher than residential rates.  They would also be subject to all of the extra steps necessary with a commercial loan. 

  If that borrower had gone to a broker who happened to work with both residential and commercial lenders, they may have had the ability to take equity from their home and applied it to the business.  Much lower rates and a more streamlined process that accomplishes the same goal.

  Finally, thanks to new mortgage industry regulations, all lenders must provide clients with much more accurate Good Faith Estimates.  While most mortgage officers pride themselves on such accuracy already, there are a few companies that have been using deceptive practices to win over clients, only to surprise them with extra fees at the closing table.

  Now, ALL fees and costs must be reflected upfront on a Good Faith Estimate.  No more will borrowers have to run to the bank to withdraw thousands of dollars to cover the surprise costs at settlement.  Any excessive fees or costs that arise at the closing will now fall upon the mortgage officer to pay! 

  Now that the playing field has been leveled, honest mortgage officers can finally be compared fairly to their seemingly "less expensive" competitors.  Mortgage industry experts expect to see another round of mortgage company closings due to this new regulation.  Unfortunately, some lenders will not be able to compete when they are forced to be honest and accurate.

  In today's housing market, flexibility and value are at a premium when looking for a mortgage lender.  No one likes to waste time, energy, and money.  If a potential borrower wants to keep their loan application process efficient, accurate and streamlined, they would be well advised to visit a mortgage broker.

Chad Moore is the VA Loan Specialist, as well as the Vice President of Commercial Lending at The Mortgage Market of Delaware.  Their offices are located at 401 South DuPont Blvd. in Milford, Delaware.  The office phone number is (302) 883-1934.  You can also check them out on the web at: www.TheMortgageMarketofDelaware.com