Local Banks vs. Mortgage Brokers

If you have a great personal relationship with a bank which lends its own money, it can conceivably cut a better deal than a broker can find on the wholesale market.  If you are an excellent borrower with a vanilla scenario you can sometimes get a better or comparable deal with a bank.  If you golf with the bank president or went to prom with the bank's loan officer, then you might get a better deal at the bank.

Otherwise you are pretty much better off with a broker who can shop the lenders and know the programs.  Even better would be a small lender (disclaimer:  guess what I am!) who can shop lenders and lend.  Very rare is the occasion when the average borrower can find a better deal from a bank.

Becky,

I am very surprised by your comment. Most mortgage brokers have acess to wholesale products that banks offer. There are portfolio product that banks offer but we also have acess to them. Our industry has undergone many product changes in the last few months and product and guidelines are changing frequently keeping us all on our toes. 

Doreen Hargreaves

Becky I agree wholeheartly with Chris Mulder... it all depends on who is working the deal and how experienced they are with their programs. I work for a bank and my husband is a mortgage broker..so all in all I can't say one is better than the other because we  are both very busy.  But there are deals that would be better served with a broker and their are deals that are better served with a bank.  So we are each others best referral source.  I would try to find a solid banker and an experienced broker!  

 Just like not all realtors are created equal!  Glad to hear that she got her loan closed with the bank! :)  

Becky,

Good question. Without knowing all the details, I'd say that mortgage brokers still have more resources than any one bank. They can shop the whole array of choices and find the best fit for their customers whereas banks are limited to their own products.

Becky:

This story makes no sense.  The banks are restricted to GSE guidelines.  The mortgage brokers are not. Mortgage brokers can take a deal through the wholesale department of a large bank and get the loan approved where the retail side of the bank cannot get it approved.  Again, its a totally different set of guidelines.  The boy at the bank is misinformed about mortgage brokers going away.  If they did, the banks wouldn't have anyone to give their turndowns to.

Becky,

What probably happened is what happens ALL THE TIME!!  The bank, with little information, probably looked at her credit and told her that "sure they can do it".  Then when all the details come forth, they won't be able to.

Did she ever get the loan done through her bank?  Because I would bet dollars to donuts that it will fall through.

For your question, NO WAY do I think that mortgage brokers will disappear.  Bill is exactly right, where would all the turn downs go?

Not to "toot my own horn", but I blogged about this exact subject a few days ago. Brokers vs. Banks - Pick me first!

Becky:

Many years ago, local banks had the "Gold Ole Boy Network."  This is where the board or committee sat down and discussed loan applicants once per week.  There weren't any real underwriting guidelines.

It went something like:

Banker A: Well Jed Jones wants a loan for the Ramsey's house.

Banker B: "Jed?  Isn't that ole George Jone's grandson?"

Banker A: Yes.

Banker B: George is a great man.  You know he donated the West Wing of the Washington school.

Banker A: Motion to approve the loan for Jed Jones.

Committee: Aye (in unison)

Banker A: George have Betty Sue set up the closing.

Of course, this sort of thing would never happen in Florida. No way.

Here is a thought.

What would you think If I were to tell you.....

"I know of a small shoe store that has 8 styles of shoes and limited sizes and you really should try it out because your big fat feet all covered in bunyans and calluses just might fit in a pair and oh by the way, forget about trying that new large shoe store down the street with thousands of shoes and all sizes because you probably wouldn't find the right fit".

The above is the Mortgage Broker V Banker argument.  For those who are reading this post and need further explanation of the above analogy.......The small shoe store is the bank.  The large shoe store is the mortgage broker.

Bill,

That's a GREAT analogy!!

Becky,

Wow, she did get it done?  I apologize I must have missed that post.  That's great for her, and I stand corrected! 

I wonder what the difference was....

Katie:

Thanks for the compliment on the analogy. You have my permission to use it to educate. 

There are some pieces of the puzzle missing.  We aren't getting the whole story and Becky probably doesn't know either because of privacy issues.

Bill,

That's kind of what I'm thinking.  Something is definitely missing here.

I am curious how everyone that commented on this in the past feels today. Mortgage Brokers and local bankers both have a role. In either case, i like local. The broker may use a non local bank, but i want the broker to be local. I fear and loathe on line Brokers. I want to see the lender. And, local banks will definitely do things for local people that a Broker wont. But, a Broker often has more options. They both have a place.