Compare Mortgage Brokers
to Direct Home Loan Lenders.
Should I use mortgage loan brokers or direct
lenders for my home financing? Let's look at the pros and cons and see. An explanation on how
mortgage brokers and
direct lender companies differ and
compare. Some misconceptions are revealed and much confusion is eliminated by
explanation.
Mortgage lenders offer only their company products at
only
their rates and fees. Mortgage loan brokers offer a wide variety of home loans from numerous
companies direct lenders wholesale departments.
Interest only loans and
adjustable or ARMs are but a few.
They're usually offered at rates and fees below that of a direct retail mortgage lender. Applying with
reputable and professional loan agents online is very much like
applying with all best direct lenders at one time. The big difference is, you know you'll
finalize your home loan with the lowest
interest rates and
fees for
your individual qualifications at the most appropriate direct lender. They shop for your
loan file package among several direct institutions through their wholesale
departments. You will usually pay a lot less for a mortgage with brokers online than what you'd pay through banks or finance companies.
Just request a good faith estimate of
costs in writing for a full break down of rates and fees.
A major misconception is that you pay more using mortgage
loan brokers due to middleman add on fees. This is patently not true. The
mortgage brokers fee replaces the lenders origination fee. All other fees
are the same standard and customary fees involved in any loan transaction. The
reality is, you can typically find better
interest rates and lower total fees through an agent than you'd get from
any direct lender. The reason for this is that brokers of mortgages will shop the
loan package online with their numerous lenders over the entire market.
You can even get loan pre-approval
before you shop for a house. Mortgage brokers completely process and submit your completed
loan file with credit report scores
to the most favorable lender. He / she can
submit your package to several lenders and will place your home loan with the one offering you the best package for your qualifications.
If one company has a problem with your qualifications or the property
qualifications, or
has higher rates, the agent will take your loan file to another direct lender. He / she is paid a fair fee for
their valuable service of about 1% of the total loan amount. If this fee is
charged, an origination fee is usually not. Direct lenders charge an
"origination fee" of about 1% but no broker mortgage fee is charged.
In that respect, it's a wash. However, if one
particular direct institution doesn't have the best rates or fees when
it's time to close, they won't transfer
your file to another company without charging large transfer fees. Again, the agent
just submits the file to another company that has a lower interest rate and
fees. This makes home buying much
easier and less expensive.
Reputable mortgage loan brokers only goal is to secure the best online product for the
client
at
the best price for a fair and reasonable fee
for their service. NO direct home lender or agent can work for free. They'd be
out of business next week if they
did. Don't get tricked. If a deal sounds too good to be true, it most likely
is.
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