Where To Get A Mortgage: Broker, Lender, or Bank?

Where To Get A Mortgage: Broker, Lender, or Bank? Stephanie Weeks breaks down the different types of lenders and the pros and cons of getting a mortgage loan from a mortgage broker, mortgage lender, or a bank. If you're wondering where to get a mortgage in 2020, look no further!

🎁 As a bonus to help you understand the mortgage process, I'm giving away a free copy of my best-selling book, Mortgage Peace: HERE

Watch on YouTube: https://youtu.be/--eRF2tHJ24

Video Transcript

But you might end up with the wrong loan for you. That would be a prime example of you spending thousands and thousands of dollars unnecessarily by getting put in the wrong loan. And that's a big deal. That's a really big deal. 

If you care about your money, you care about how you spend it, you wanna stretch it as far as it can go, you need to know this information. Because mortgages can cost you tens of thousands, tens of thousands of dollars if you make a mistake with the mortgage that you choose. In this video, I'm gonna talk about brokerage versus bank versus just mortgage lender. This video is for you to figure out what is best for you. 

My name is Stephanie Weeks and I wrote the best-selling book "Mortgage Peace" on anything and everything mortgages. How to help you have a smooth and on time closing for your one-stop-shop, anything and everything mortgage education. I drop new videos every Tuesday and Saturday. Be sure to hit the bell to be notified every time a new video posts. And of course, please subscribe to the channel as well. 

What is a mortgage broker or a mortgage brokerage? It's basically a middleman that goes between the borrower and the actual lender. There are pros and cons to mortgage brokerages. One of the positives about a mortgage broker is you can call one mortgage broker and maybe they might have several different lenders that they sell to. So they might have several different buckets that they could place your loan in. And each of those lenders or buckets might offer you different pricing, might offer you different interest rates and things like that. 

One of the negatives about a mortgage broker is that they don't control the process. What I mean by that is they don't work for that lender. They're not in the office with that lender. They're not basically working for the same company as that underwriter or that closer or that funder. So they don't have any control over the process. They just take the information from you and they package it up and then they send it over to whatever investor that they're placing your loan with. The positives are, you might possibly get a better interest rate because they're shopping a couple of places for you. Negatives are less control over the process. That might be the timeline of the process. That might be the structure of the fees. That might be the structure of the interest rates. Those are some of the positives and negatives and the explanation of a mortgage broker. 

Let's compare a bank to a mortgage broker. Remember the mortgage broker had several buckets, right? And they didn't have control over the process or over the timeline because they don't work for that same company. When it comes to a bank, loan officer does work for the same company. They may have more control over the process or the timeline, but there's not multiple buckets to place your loan. So what that means is that if you walk into the bank, here's a prime example. This is not for every bank, but a prime example, I got a call yesterday from a banker who cannot help their client because they don't do a certain loan type. 

Luckily that banker cared enough about their client to call someone outside with the client's permission and say, "Hey, can you maybe help them because I don't have that product?" When you walk into the bank, yes, the loan officer works there. Yes, there may be more control over the process. Yes, they work for the same company as the underwriter closer or funder. So there might be a better relationship and a better functionality to control how that process ebbs and flows, but there's not those multiple buckets. And so if you don't fit in the box that that bank has set forth, you're not gonna get the loan. That does not mean that you can't get that loan elsewhere. That does not mean that you're truly a loan denial. It just means that you went with one place that had only one avenue and maybe limited the loan that you could get. 

Or let me throw another example your way. You might walk into that bank and apply for an RD loan. Well, that bank maybe not, maybe doesn't do an RD loan. So they come back and say, "Hey, we've got you pre-approved for FHA." You're all excited. That is fantastic. I'm approved for a home. I get to go shop. I have a loan. But many times when you're comparing RD to FHA, if you have the option for both, you're most likely going to choose RD because there are more benefits and less fees than compared to FHA, they're both amazing loans. And you might not qualify for those. 

But let's say that you did because that bank doesn't offer the better product. If you didn't go to a place that would look at your file and try to fit you with the best product for you and have the option of multiple products, aka multiple buckets then you might end up with the wrong loan, not a terrible loan, but you might end up with the wrong loan for you. That would be a prime example of you spending thousands and thousands of dollars unnecessarily by getting put in the wrong loan. That's a big deal. That's a really big deal. 

What is a mortgage company? We've talked about a broker, we've talked about a bank and we're gonna talk about a mortgage company. The broker, they do mortgages. They work with different lenders. They're the middleman. They place your loan. The bank doesn't just do mortgages. As you know, your bank probably does credit cards, they have checking and savings and stocks and bonds and CDs and investment bankers and all kinds of stuff they can offer you. They're not just a niche of one thing, focusing on one thing and being really, really good at that one thing. Well, with a mortgage lender, that's another example of they're focused on a one thing. They do mortgage loans. You're not gonna get a checking account from them. They do mortgage loans. 

With a mortgage lender, depending upon if they sell the servicing of your loan or they don't. I'm gonna give an example of when they do. So when the mortgage lender sells a servicing of your loan, you go to the one loan officer who works with a mortgage lender. Sometimes they actually also underwrite the files and sometimes they don't. And they close the loan. They fund their own money. They bring their money to the table for you to fund your loan. The bank does that too, but the broker doesn't. I didn't touch on that about the broker earlier. That's one of the differences. So the broker or the middleman is gonna be dependent upon that lender to show up on time with the money and the right amount and everything. Well, they don't have control over that. So the bank is gonna show up with their own money, the mortgage lender is gonna show up with their own money. Then generally what happens is, then they'll take their money. They'll take your loan, they'll package it up and they'll sell just the servicing of the loan. The servicing is who you make your monthly payments to. The lender is still gonna be on the hook for liability, fraud and all of those kinda things. So they have a lot more skin in the game like a bank does in comparison to a broker who has less skin in the game. So you've got more skin in the game. You have selling the servicing, most likely doing all the underwriting in house, funding the money at the table. What's the benefit? Well, if that lender is selling the servicing, they may have a bunch of buckets of servicers. Why does that matter? Because the servicer is going to buy your loan for a service releasing premium that they'll pay to the mortgage lender. That service releasing premium has differences based on the interest rate that you get. 

Why does that matter and what does that actually mean? Well, what it means is if you go to a mortgage lender who has multiple servicers, they have multiple buckets, multiple programs, multiple rates. So they can actually look at the different servicers, see who's gonna give the best interest rate for that borrower or that day to lock in, that's huge. That's potentially one credit pull instead of multiple, but that lender is shopping multiple lenders for you. So that's a huge plus of going with a mortgage lender instead of a broker or instead of a bank. 

One of my final thoughts on this situation is what I like about mortgage lender and what I like about mortgage broker and I don't like about the bank is that the bank is FDIC insured. That means that they have some exemptions that the broker and the lender do not. Me, as a loan officer who works for a mortgage lender, or if I was a broker, I have to pass a very difficult test. I have excruciating continuing education every year. And the most important part of that is I have to pass a test that many, many people cannot pass or many people at least fail the first go round. It makes me better at my job. It makes your mortgage broker better at their job. The bank being FDIC insured, the loan officer can be registered and that's all that they need. They don't have to pass that test. 

Why do you care about this? Who do you want handling your loan application? The person that didn't pass the test, that doesn't have a ton of experience most likely, or the broker, or the lender that probably has a lot more experience, a lot more hands on, and most importantly has passed a very difficult test to have the knowledge to know what to do, how to do it, and even more important than that, how to protect you as the consumer. That's just my two cents. I hope it helps. I hope you like it. And I appreciate you taking the time to hear me out on this. 

If you enjoyed this video, I have a download for you. Well, you know what? Even if you didn't enjoy the video, I'm gonna put a download link below the comments for you. But I'm going to put a link where you can register to get a free copy of my international best seller, "Mortgage Peace." It'll take you an hour or less to read, and it'll really help to unveil a lot of the confusion with mortgage lending. And I hope that it helps you to have a smooth and on time closing. 

If this video was a game changer for you and now you know what the heck people are talking about when they say broker versus banker versus lender, then type win in all caps in the comments and let me know. Give me that feedback. Let me know what you think. Let me know if this was helpful. And I hope to see a lot of wins in the comments below. 

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September 24, 2020
Mortgage Tips