There are different options. I've worked with and around the biggest banks in the nation for many years now. I choose to be a broker because I consistently see this as the best way consumers get the best service and especially lowest rates and fees on their mortgage. I also pride myself on my comprehensive knowledge of the industry as well as presenting all sides of lending possibilities. So here is what I've seen...
First truth. Banks are in business to make money...
They employ loan officers, mortgage bankers, or what ever they are called in any given year to capture the most attractive market share to make the most money and please their investors.
Second truth. Banks will use every available channel to capture market share...
Folks, you can get a bank loan by going to a bank loan officer who will tell you that is the best way, or you can call in to their phone center for the latest mortgage special sent to you in the mail, or you can go through a broker who is being courted by their wholesale account representative who is assigned to sell me on why their wholesale division is the best around for brokers.
Yes, your loan will ultimately end up being serviced in the same place, but you will have many ways to get through the application and closing process. And they will all tell you their way is the best!
As I've said, from my first hand experience working for and with each of these different entities, I personally believe broker between banks is the best. And here is why...
Working with an experienced broker with a comprehensive knowledge of the industry provides you with insider insight (leverage) into which bank is aggressively seeking the type of loan you need. At different times during the year, banks get aggressive and conservative with their rates and underwriting conditions. Lower rates and more flexibility with approving your loan at different times depending on their business practices, time of fiscal year, whether they are building capital or building their loan portfolios. As well, certain banks go after niches that they want to build. If you go to one bank for your loan you lose this leverage.
Example: I often see different banks, and I'm talking about the biggest in the nation, each have more attractive rates on the 30 year, 15 year, and ARM products separately. Same goes for banks that specialize in large loans, construction loans, and financing different types of commercial property. Many of the bigs on the retail side will tell you they do it all, but they have different pricing (better than market or worse than market) on certain products depending on what kind of loans they want to attract that month.
Internet shopping employs the same idea of shopping banks that brokers employ, without the sometimes high pressure of meeting with a broker in person. I think that it why it is attractive to some. But, I've competed with the internet quite a bit with consumers who go there first and then come to me. I've found I can beat their rates and fees offered--EVERY TIME. Reason: Uniform price collusion. Time and time again when I or associates have priced the internet, I find their rates and fees to be higher than normal. But, by presenting a united front, they appear to have given the shopper a number of competing offers--but all at inflated rates.
Also, the biggest weak point that internet intake vehicles lack is local experts, flexibility, and a local office. What if you are unhappy, where do you go to look someone in the eye and seek remidiation? As well, lending rules and regulations differ from state to state. Not to mention title and taxes. Do you want some phone intake national loan officer making $50 an application steering through the confusing loan process? And if they are making $50 a loan are they really going to go the extra mile if there are ways they could save you money or help push your loan through if you are right on the border of qualifying for the best possible loan terms (or qualifying at all!)
Folks, I see my role as a consumer advocate. I use my experience and lender relationships to ensure your loan gets done. As well, I use my knowledge of who is aggressive with rates and niches to insure you get the lowest rates and fees on your loan. As always, I invite you to compare, you'll be glad you did.
There are a number of options to finance that new home--even if the market is slow and listing times are long...
First, get a team of experts on your side. Interview a few realtors and see which ones have the best strategy for selling your existing home. Ask them how long their personal listing times are, how they plan to market your home, and what exclusive listings techniques they employ to stand out in an overcrowded market. A good realtor will be straight forward with you about freshening up your homes interior and exterior, as well as what price you should list at and ultimately hope to get for your home.
Second, consider some form of refinancing of your existing home to put down money towards your new purchase. Traditionally, a bridge loan, not tied to your house, but to other collateral (credit, assets, banker relations) was common to use. But, increasingly, these have become outdated and are very expensive in terms of carrying high interest rates and fees. A better way is to do a cash out fixed rate or home equity line refinance on your existing property. You can often use the equity in your current home and the fact that it is your defacto primary residence to your advantage, often at little or no cost to you with much better interest rates than a bridge loan.
Finally, the key is to give your self enough time to do this! Add to your team of experts a good accountant and financial planner to make sure...
Remember, if you have to rush a new home purchase, you may lose leverage in bartering a good price for your new home, not adequately presenting your old one, and possibly making mistakes with your finances that could cost you money and leaving you feeling stressed when you should be elated that you have taken advantage of a down market.
Bottom line, get to mortgage broker first, and involve the other professionals on your team before you go house shopping. You will be glad you did.
Many people ask me about internet shopping for a loan. My problem with this has always been that...
1) those low rates are usually deceptively advertised "$200,000 loan with a monthly payment $399" Read--Option ARM
2)Their loan officers are $10 an hour employees with often little experience in the industry or with loans that don't fit into a neat box and
3)their offices are not local, where to you go for remediation if you are unhappy?
A client and good friend of mine needed to refinance his existing home. I invited him to go to an internet site, the one with tree in the name, and get four mortgage quotes. He did and emailed the results to me. The quotes we're semi-competitive until I read the fine print. The closing cost estimates didn't include title and the computer didn't catch that this was a cash out transaction. Translation--closing costs on any of the terms quoted on this $200k deal $6,300. I went shopping on the wholesale side and found that I could match any of the quoted rates. And get this, (and I was amazed myself), for $1,000 closing costs. Folks, I know the "when banks compete, you win" motto seems comforting, but I believe it is just another way to present a united front of costs and rates that are too high. If you need a loan, shop the internet, and then run the figures by me. You will be glad you did.
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