A tale of two brokers

[Urchina]

Yesterday I spent an hour or so talking (in two separate conversations) to a couple of mortgage brokers. We're thinking about moving into a larger house and want to know if we'll be able to keep this place as a rental and still buy a larger place.

The difference between the brokers was stunning. One guy told me, off the top, that if I wanted a 30-year fixed on both places I was dreaming, and that reality dictated that we'd need to go with a portfolio lender and get a 5 or 7 year option ARM if we wanted to stand a chance of getting a mortgage for a bigger place. He pointed out that we would need to refinance when the ARM reset in five years, probably, but implied that since that was in the future we wouldn't need to worry about it now. (Hello? With interest rates at a current low, why would I want to refi in five years when they're almost assuredly going to go up?)

The second guy I talked to said "Well, here's how to do what you want to do" and then proceeded to lay out the calculations and conditions (many of which are new as of this month per Freddie/Fannie changes) so that we could crunch the numbers ourselves.

I hadn't shopped for a mortgage broker before, but after this experience will never choose the first broker I talk to again, for sure. We still don't know if we'll be able to get a bigger place with or without keeping this one (haven't run the numbers yet) but I do know which broker I won't be using.

 

[Rustic23]

Never used a mortgage broker. I have gone directly to the bank, savings and loan, and a credit union. Why do people use a mortgage broker? Not trying to be flippant, I was just wondering why.

 

[Bestwifeever]

Me neither.

Urchina, I wonder what a bank or credit union, if you contacted them directly, would suggest.

 

[FinanceDude]

Never used a mortgage broker. I have gone directly to the bank, savings and loan, and a credit union. Why do people use a mortgage broker? Not trying to be flippant, I was just wondering why.

Mortgage brokers "shop" a lot of lending sources. It has been my experience that most banks, credit unions, etc, will NOT match a lower rate that someone else has. Usually the mortgage broker I use is half a point under the big banks and has been lower most of the time than my credit union.........

 

[haha]

Mortgage brokers "shop" a lot of lending sources. It has been my experience that most banks, credit unions, etc, will NOT match a lower rate that someone else has. Usually the mortgage broker I use is half a point under the big banks and has been lower most of the time than my credit union.........

Do you do this service for your clients?

Ha

 

[Rustic23]

Well, that certainly does not sound like what the first broker above did. Maybe it is like some stock brokers and financial advisors you always have to wonder who's best interest is being served.

 

[kumquat]

Never used a mortgage broker. I have gone directly to the bank, savings and loan, and a credit union. Why do people use a mortgage broker? Not trying to be flippant, I was just wondering why.

We have a condo in another city that DD lives in. Bought it originally with a mortgage. At last renewal, shopped around a bit to the major (Cdn) players. We didn't just pay it as we were thinking of giving it to her (or our equity). Didn't like the banks rates. Tried a broker who got us .6% less than the same bank offered me. This after I wasted a lot of time bargaining with them.

This is a Canadian story so YMMV.

 

[saluki9]

Do you do this service for your clients?

Ha

Can't speak for FD, but we do.

 

[W2R]

I used a mortgage broker in 2002, and would do it again. HOWEVER - I was a first time home buyer and don't consider myself an expert. Urchina, I didn't know this (maybe you do), but much, even the rate, is negotiable with the mortgage brokers. So stick with the broker you prefer, and if you know of a better rate, be honest.

When the day came to sign something, my mortgage broker tried to give me a previously discussed rate that was higher than rates were that day. She hadn't locked me in. I was frank and asked her why I should go with her rate when I could get "x%" which was available from two companies on bankrate.com that morning.

She got back to me later that afternoon and gave me the same rate that I found on my own, but with a bank that I felt was much more stable and reputable than the companies I had found on my own. Interestingly, the rate she gave me was lower than that more reputable bank had listed on their website.

Another thing that was very helpful to me as a first time home buyer was the availability of her secretarial staff to take care of all the details and inevitable snags that threatened to delay closing. All I had to do was call them when the usual problems arose, and sign on the dotted line at closing.

 

[FinanceDude]

Do you do this service for your clients?Ha

I refer them to him if they need assistance with mortgages, yes. I have known the guy for 10 years and he was on the Chamber of Commerce Board with me.........

 

[REWahoo]

Thought this a pertinent and timely article for this thread:

Lenders drop mortgage brokers

NEW YORK (CNNMoney.com) -- Some big banks have cut back on doing business with mortgage brokers - and if the trend continues, many mortgage brokers could close down.

That may be bad news for consumers because fewer brokers could lead to a less competitive marketplace and more expensive home loans resulting from consumers not being able to easily comparison-shop rates.

 

[Nords]

NEW YORK (CNNMoney.com) -- Some big banks have cut back on doing business with mortgage brokers - and if the trend continues, many mortgage brokers could close down.
That may be bad news for consumers because fewer brokers could lead to a less competitive marketplace and more expensive home loans resulting from consumers not being able to easily comparison-shop rates.

Why... why... that would be as crazy as the prospect of homeowners buying & selling real estate without realtors to help them easily comparison-shop their homes!

If only there was some means of rapidly disseminating large volumes of valuable pricing information across the nation in near-real time. Golly, people might even be willing to pay for realistic data that leads to a liquid market....