What does a mortgage broker do?
June 16, 2017 9:28 PM Subscribe
We're first time homebuyer verrrrrrrry early in the process, in a very competitive market (SF Bay Area). We're trying to figure out what a mortgage broker does and if we need one, or if we should just apply directly to banks ourselves. Explanations, links, and personal experience would all be helpful & appreciated!
Other salient details:
* We'll be putting 20% down.
* We're have excellent credit, so don't expect qualifying to be a problem necessarily.
We've heard horror stories where the loan falls through at the last minute and the mortgage broker saves the day. Is that scenario the main/only reason to use one?
Other salient details:
* We'll be putting 20% down.
* We're have excellent credit, so don't expect qualifying to be a problem necessarily.
We've heard horror stories where the loan falls through at the last minute and the mortgage broker saves the day. Is that scenario the main/only reason to use one?
Banks are assholes, your mortgage broker will deal with the assholes for you. The first time I bought a home I dealt directly with the banksters, they had me in tears. The second time I used a mortgage broker, it was a breeze, no tears. Use a broker, the bank will try to tell you you don't need one because it is only in your best interests, not theirs, they hate them.
posted by BoscosMom at 10:23 PM on June 16, 2017 [3 favorites]
posted by BoscosMom at 10:23 PM on June 16, 2017 [3 favorites]
We had a bank keep us hanging on the line for weeks, a mortgage broker was able to secure us a loan within a week and a half. Our interest rate was about half a percent higher going through the broker than the bank's would have been, but the bank may or may not have even given us the mortgage.
posted by drapatz at 11:13 PM on June 16, 2017 [1 favorite]
posted by drapatz at 11:13 PM on June 16, 2017 [1 favorite]
I remain an eternal fan of our mortgage broker. He was able to shop our lender profile around before doing full credit pull applications and found us an offer from some crazy sub-prime lending arm of GE Money we would never have found that was and is so amazing we can literally never refinance because the rate is unbeatable even 10 years, one crash and one economic recovery later. He offered excellent advice along the way, explained the 30 million things about mortgages you know nothing about, and made the whole process painless, exciting and very nearly fun.
posted by DarlingBri at 12:50 AM on June 17, 2017 [2 favorites]
posted by DarlingBri at 12:50 AM on June 17, 2017 [2 favorites]
When I have bought houses in the past, my first stop was at my mortgage broker's. They told me, based on my income, FICO, amount I was putting down, etc., what I could afford. Once I made a decision, put down an offer on a home, and had that offer accepted, I told my real estate agent the name of my broker. Next call I got was from the broker and we were off and running. I can't even imagine working directly with a bank. Ugh.
posted by eleslie at 6:27 AM on June 17, 2017 [1 favorite]
posted by eleslie at 6:27 AM on June 17, 2017 [1 favorite]
We used a local credit union that we knew well for our mortgage (had already used them for car loans, rates were very good compared to what we could find elsewhere). So no mortgage broker for us. But if you don't have an existing relationship with a bank and are in a hot market, it may well be a good idea.
posted by cpatterson at 7:22 AM on June 17, 2017
posted by cpatterson at 7:22 AM on June 17, 2017
Our mortgage broker helped us put together an 80-10-10 offer, where we only needed 10% down payment and used a HELOC for the other 10%. It was a creative approach that we wouldn't have otherwise known about, and helped us control our liquidity.
posted by migurski at 8:14 AM on June 17, 2017
posted by migurski at 8:14 AM on June 17, 2017
We tried to use our credit union, and we missed an offer deadline because they failed to get us a loan. We called the mortgage broker our agent recommended just so we wouldn't miss the next house … and then the sellers contacted our agent to say we had a second chance. The new mortgage broker got us a loan in about 36 hours. We love our house. We love our mortgage guy.
We actually got a followup call from somebody pretty high up at our credit union after they failed on us. The main takeaway was that while they felt really bad about screwing us over, they didn't offer a loan product that fit our needs. They only worked with a single consolidator and that consolidator would only buy three specific loan products from them. In our case what our mortgage broker did was a thing our credit union literally couldn't do, based on the way they originated loans.
We used the same mortgage guy when we refinanced and he was still great. He worked with my nebulous requirements and helped us get to the best product for our needs. FWIW we gave our credit union a shot on the refi, and they managed to shoot themselves in the foot early enough in the process that we didn't bother following up with them. They were also useless on our HELOC.
So, yeah. We're in the "use a mortgage broker" camp. He or she can shop you around to find the best products, and they don't make money unless you close so they work really hard to prevent problems and make sure your closing goes off without a hitch. Maybe if you have a great relationship with a great bank that has a great loan department you might do better, but that seems rare.
posted by fedward at 8:17 AM on June 17, 2017 [1 favorite]
We actually got a followup call from somebody pretty high up at our credit union after they failed on us. The main takeaway was that while they felt really bad about screwing us over, they didn't offer a loan product that fit our needs. They only worked with a single consolidator and that consolidator would only buy three specific loan products from them. In our case what our mortgage broker did was a thing our credit union literally couldn't do, based on the way they originated loans.
We used the same mortgage guy when we refinanced and he was still great. He worked with my nebulous requirements and helped us get to the best product for our needs. FWIW we gave our credit union a shot on the refi, and they managed to shoot themselves in the foot early enough in the process that we didn't bother following up with them. They were also useless on our HELOC.
So, yeah. We're in the "use a mortgage broker" camp. He or she can shop you around to find the best products, and they don't make money unless you close so they work really hard to prevent problems and make sure your closing goes off without a hitch. Maybe if you have a great relationship with a great bank that has a great loan department you might do better, but that seems rare.
posted by fedward at 8:17 AM on June 17, 2017 [1 favorite]
Another "use a broker" vote here. We had a mortgage from Wells Fargo that we wanted to refinance in 2011 when interest rates were in free fall. On the theory that it would be cheaper to work directly with the bank as they had an interest (ha!) in keeping our business, we contacted them to see what they could do. They denied our refi application despite the fact that we never missed a payment on our existing loan, so we went to a mortgage broker. He got us a great rate with no closing costs from ... Wells Fargo! I was happy to take their cheap money despite (or perhaps because of) my feelings about them.
Bottom line: brokers know how to work the system and can end up saving you lots of money. Find a good one by asking your friends/family/coworkers and see what they can do.
posted by fawaffle at 11:15 AM on June 17, 2017 [1 favorite]
Bottom line: brokers know how to work the system and can end up saving you lots of money. Find a good one by asking your friends/family/coworkers and see what they can do.
posted by fawaffle at 11:15 AM on June 17, 2017 [1 favorite]
I did both of the plans above: I applied for a loan through a broker, and I simultaneously applied with my local credit union. They both came through, and during the process I was more comfortable with my credit union's process, so went with them (the costs were almost identical), but kept the broker's offer on the back burner. This was especially important for me as I was getting a jumbo loan at the bottom of the market, when qualifying was very difficult, and knowing that I had two completely separate plans gave me great comfort. I held onto both options until I would have had to pay a lot to keep both open, and then just went with the CU's loan.
The downsides to the broker are that they almost exclusively go with big banks, and I favor small, local lenders, and my broker kept it hidden who the chosen lender would actually be for a long time, and when she did tell me, it was someone with a terrible track record for servicing the loan (whereas I knew my CU had a wonderful track record, and that they guaranteed they'd hold and service the loan for its whole life).
If I were to do it again, I'd do the same thing, because it's not an either-or option until fairly late in the game (if you're willing to spend a few hundred dollars, which I was given the huge cost of the mortgage).
posted by Capri at 2:01 PM on June 17, 2017
The downsides to the broker are that they almost exclusively go with big banks, and I favor small, local lenders, and my broker kept it hidden who the chosen lender would actually be for a long time, and when she did tell me, it was someone with a terrible track record for servicing the loan (whereas I knew my CU had a wonderful track record, and that they guaranteed they'd hold and service the loan for its whole life).
If I were to do it again, I'd do the same thing, because it's not an either-or option until fairly late in the game (if you're willing to spend a few hundred dollars, which I was given the huge cost of the mortgage).
posted by Capri at 2:01 PM on June 17, 2017
My broker looked at my CU but told me it would cost me more, so I went with another bank and am quite happy.
I had no idea, the broker helped explain the whole thing to me.
posted by freethefeet at 9:55 PM on June 17, 2017
I had no idea, the broker helped explain the whole thing to me.
posted by freethefeet at 9:55 PM on June 17, 2017
I've done both. Broker certainly makes it easy. But don't count on them having the best fee schedule and rates. Do some homework. We got a better deal on our last house through the credit union. It wasn't hard to work with them.
posted by shew at 10:54 PM on June 17, 2017
posted by shew at 10:54 PM on June 17, 2017
Just bought my first house. Mortgage brokers were exceptionally good communicators. Not only did they shop around for the best loan rate based on my incomes/savings/FICO/etc, they were the only people who were hired by me to work in my best interest (treat yr buying agent like a charismatic drug addict, frankly). They explained all the details patiently, including any changes along the way, talked pros and cons, provided all the worksheets I wanted, walked me through paperwork promptly and were honestly just so helpful. Totally worth the likely slight interest increase vs. direct through a bank.
Also my realtor was a fucking piece of scum, so it was nice to have some professional and competent people involved in the process somewhere.
ETA: Also, if you trust your broker, they can be a good place to solicit reccomendations for inspections, suveyors, etc., since you can't trust yr realtor.
posted by sazerac at 8:18 AM on June 21, 2017 [1 favorite]
Also my realtor was a fucking piece of scum, so it was nice to have some professional and competent people involved in the process somewhere.
ETA: Also, if you trust your broker, they can be a good place to solicit reccomendations for inspections, suveyors, etc., since you can't trust yr realtor.
posted by sazerac at 8:18 AM on June 21, 2017 [1 favorite]
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posted by willnot at 10:03 PM on June 16, 2017 [2 favorites]