October 2nd, 2014 11:25 PM by Robin Bain
Few people realize there are large differences when choosing what type of company to get your new mortgage from. I have worked on both sides of the coin and will recommend to anyone: Find the best Mortgage Broker you can.
10. Licensing Qualifications – Brokers have many more laws to abide by and are more heavily licensed than Bankers.
All Brokers are required to be SAFE Act compliant including being registered with the Nationwide Mortgage Licensing System. The new licensing requirements: 20 hours of education, FBI Fingerprint scans, Submission of a credit report, and a satisfactory score on the Federal and State Licensing Exam. Once licensed the broker must complete 8 hours of continuing education to maintain their approved status. Not all Bankers are required to meet the above guidelines; they can operate under the company licenses without being individually scrutinized.
9. Full Disclosure – All Brokers must be completely transparent when disclosing the closing costs to the borrower, even including their compensation. Bankers Do Not, nor is it figured into the fees they show you.
We have to show you how much we make during the transaction and our fees are also considered when calculating whether or not the loan passes the Qualified Mortgage Rules Fee Cap. As of Jan 10th 2014, there is a 3% cap to the amount of fees that can be charged on a loan that is equal to or greater than $100k. Brokers are not allowed to collect compensation from both the borrower and the lender in the same transaction. We must choose one or the other, tell the borrower which and then show them the amount we are collecting. Bankers do not have to disclose their compensation and their compensation is not figured into the new Qualified Mortgage Rules Fee Cap. Bankers do not have to let you know their compensation nor is it regulated under the new federal laws.
8. Ability to Shop – Brokers have various lenders in their portfolio, so they can effortlessly shop for you. Bankers cannot shop around and sometimes are unable to even get your loan approved.
Brokers can pair you with a lender that offers the best rates and costs for your situation and tailor the loan to meet your needs. Bankers are usually stuck selling one product to everyone with no option to shop you around and find you the best fit.
7. Wholesale Vs. Retail – Brokers sell wholesale, bankers sell retail.
When you use a Broker it’s like shopping at Costco or Sam’s club versus going to Walmart or Target. Everyone knows that the wholesale stores offer better deals than their retail counterparts.
6. Smaller Company means Better Customer Service – Brokers have more time to work on a personal level. Bankers work in volume and not have time to provide personal service.
Most Brokers work for smaller local companies that focus on customer service instead of margins and bottom lines. Those large Banks sure have big names, but tend to do loans in volume to make investors and stockholders happy. A smaller local company is more than likely focusing on building customer relationships in the community than quarterly profit and loss statements.
5. Faster and Easier Process – A common misconception today is that a broker has no control over his business, but must rely on the actual lender to close the loan. We have competitors time and time again tell our clients if they want the loan closed then they better choose a banker.
False, we have more control over our loans because we do all the beginning initial pre approvals and qualifications. Before we can submit a file to a lender it must be completely scrubbed by us and been run through Fannie Mae’s Automated Approval system. This ensures the file is approved and is ready to be underwritten by the lender. Most lenders hold brokers to high standards when submitting files that don’t close and a dirty file could cost us our relationship with that lender. Once in the door approvals take 24-48 hours, then we can start moving a loan toward closing. Fact is; as a Broker I can get a loan approved and closed before most Bankers can get an approval. Need a loan closed in just a couple of weeks instead of a couple of months, then find a mortgage broker to work with.
4. Broker Hours vs Banker Hours – My hours don’t end when the Bank closes, therefore I am here to help my clients at any time.
As an independent Mortgage Broker I am always available to answer your questions and take your calls. Most of my business is done actually done before 9am and after 5pm, which is more convenient to the borrower. When the bank closes, everybody goes home and you get the answering machine.
3. Knowledge – Brokers are usually more educated and experienced because of the strict licensing requirements and qualifications.
Strict licensing requirements and qualifications have weeded out most of the fly by night Brokers. Those of us who are left have been in the industry for a number of years and have continued to be successful despite the growing pangs the industry has gone through since 2010. Most companies won’t hire anyone without years of experience and a proven track record for success. Banks are much more willing and likely to hire a newbie because they don’t have to be licensed. Those few brokers who are left standing are the best of the best in this industry.
2. Lowest fees – Since Mortgage Broker’s Compensation is regulated by law we have seen these fees come way down and benefit the borrowers.
On most of my deals I rely on my lender paid compensation to earn my commission. This means I charge ZERO fees to the borrower, so all they are left with is Lender, Title and appraisal fees. There are no points or origination and usually I can offer them a credit toward their closing costs to make them even lower. The way it works is that each broker company must decide on a compensation plan with their lender of choice. This is done usually once a quarter or monthly. So every loan we bring to our lenders have a predetermined % of compensation we can expect to earn. That means no matter which rate you choose, I am paid the same amount. No reason to steer you into a higher rate to make more money. We have our comp plans fairly low in the market, so when we offer a rate there is usually money still left over that goes to our clients as a credit to lower their overall costs.
1. Lowest Rates – Compounding on the lower fees is of course what rates come at those fees. Since we are a smaller company with less overhead, we focus on the lowest rates.
The Big Banks have a lot of overhead; buildings, light bills, phone bills, tons of staff, and the list keeps going. In order to compensate for their rising costs they have to make it up somewhere, usually from your pocket in the form of a higher rate. Simply put, I don’t have to pay for all that stuff so I can give you the best rate and the lowest cost. Massachusetts License Number Broker MB1498 Licensed by the State of New Hampshire Banking Department- License Number 5430-MBR Premiere Mortgage Services Inc. NMLS #1498 is a licensed broker and not a lender.We arrange but do not make loans. Dana Bain NMLS #18693 Robin Dunbar Bain NMLS #18699Here is the link to the National Mortgage Licensing System http://www.nmlsconsumeraccess.org
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