Go through a lender? Or, go directly to the bank?

Private Lending & Conventional Mortgage Advice
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Go through a lender? Or, go directly to the bank?

Victor SoBusiness Member
Real Estate Agent · Chicago, IL · Member since 2017 · 325 posts · 193 votes
Hello BP community! For a conventional mortgage, is it better to go directly to the bank in order to avoid the lender fees or will the banks charge all sorts of fees as well? Any advice would be appreciated! Victor
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Merritt Noel
Lender · Denver, CO · Member since 2016 · 51 posts · 27 votes
9y
Banks typically can only offer the products and rates they have in house. A lender typically works with a number of different banks/investors and is able to shop rates and loan programs to find the right fit. That being said sometimes a local bank or smaller regional bank can make more common sense decision where lenders have to follow the rules of the investors and product guidelines they work with. Lastly, if you are looking to get something down more quickly banks tend to be much slower when compared to lenders. How this helps. Good luck!
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  • Jennifer Jacobs
    Real Estate Agent · Villa Rica, GA · Member since 2017 · 38 posts · 28 votes
    9y
    @Victor So , a bank is a lender of conventional mortgages. They do charge fees. I'm not sure if I am missing something in your question.
    1Reply
  • Joshua Fulenwider
    Rental Property Investor · Greeley, CO · Member since 2017 · 226 posts · 99 votes
    9y

    Both will have fees.  A broker may be able to give you several more loan options.

    1Reply
  • Victor SoBusiness Member
    OP
    Real Estate Agent · Chicago, IL · Member since 2017 · 325 posts · 193 votes
    9y
    Jennifer Jacobs Joshua Fulenwider Thanks for your responses! I guess what I'm trying to get at is... I pay my lenders roughly 1000-1300 dollars to get a loan from a bank. I'm wondering if there are any other ways to get a conventional loan for cheaper.
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  • Victor SoBusiness Member
    OP
    Real Estate Agent · Chicago, IL · Member since 2017 · 325 posts · 193 votes
    9y
    I mean... conventional mortgage.
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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    9y
    Originally posted by @Victor So:

    Jennifer Jacobs Joshua Fulenwider

    Thanks for your responses! I guess what I'm trying to get at is... I pay my lenders roughly 1000-1300 dollars to get a loan from a bank. I'm wondering if there are any other ways to get a conventional loan for cheaper.

     You can swap rate for fees, fees for rate. Once in contract and ready to lock, the lender should be providing you with a series of interest rate and closing cost options like a menu (changes daily, waste of time to talk about it before you're in contract and ready to actually lock that day). Even the least choice-y lender I broker to always has at least 4 options.

    2Reply
  • Andrew PostellPro Member
    Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
    9y

    @Victor So super important to know you are getting the best loan you can find.  Also super important to be using the best lender you can find too.  Do shop and compare lenders.  And think of this like gasoline: if you can see gas prices for all the stations on the same day that will give you a good idea about who's price is best.  If you go to this station today, that station in 3 days, another gas station next week....well, gas prices in general might have gone up or down and you may not be getting a fair comparison.  Interest rates are a lot like gas prices, they go up and down each day and sometime several times in a day.

    But what if the best, friendliest, simplest, close-on-time-best, low stress lender was $100 more expensive?  Would you use that lender?  Maybe...or probably.  Price is important but so is closing!  Make sure you are working with a lender that knows what they are doing.  And here's a tip:  most lenders will match other lender's offers.  So if you do find a lender that you want to use but they are a little different in price, ask them to match the lowest price.  Often times they will.  Hope this helps!

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  • Victor SoBusiness Member
    OP
    Real Estate Agent · Chicago, IL · Member since 2017 · 325 posts · 193 votes
    9y
    Chris Mason Thanks for the input! Are lender fees of about 1000-1300 typical? Is this what you charge as well?
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  • Merritt Noel
    Lender · Denver, CO · Member since 2016 · 51 posts · 27 votes
    9y
    Banks typically can only offer the products and rates they have in house. A lender typically works with a number of different banks/investors and is able to shop rates and loan programs to find the right fit. That being said sometimes a local bank or smaller regional bank can make more common sense decision where lenders have to follow the rules of the investors and product guidelines they work with. Lastly, if you are looking to get something down more quickly banks tend to be much slower when compared to lenders. How this helps. Good luck!
    3Reply
  • Victor SoBusiness Member
    OP
    Real Estate Agent · Chicago, IL · Member since 2017 · 325 posts · 193 votes
    9y
    Andrew Postell Your response was extremely helpful! Thank you!!
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  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    Usually through a bank.  I think you are asking if you should use a broker or go to the bank.

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  • Christopher Phillips
    Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
    9y
    Victor So A mortgage lender originates loans like any bank, they just don't have other banking services available like savings and checking. So, both will charge underwriting and loan origination fees. At the end, the lender will sell their loans to someone like Wells Fargo. Direct lenders can often have more flexibility with fee discount programs versus the big box banks. Like waving some fees for union members or health care workers. Some direct lenders will also use more creative loan packages and keep those in house instead of selling them... Mortgage brokers don't originate loans, they just shop around for you for a fee.
    1Reply
  • Eric James
    Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
    9y
    I'm similarly wondering if I should work with a mortgage broker or local bank. I'm currently purchasing a primary residence through a broker, and will likely purchase 5-6 family homes over the next 6 months. Within 2 years I will likely reach 10 residential mortgages, which seems to be a point at which borrowing terms can change. Thinking of what might be to my long term advantage, might it be better to continue working with a mortgage broker or try to develop a relationship with a local bank?
    1Reply
  • Victor SoBusiness Member
    OP
    Real Estate Agent · Chicago, IL · Member since 2017 · 325 posts · 193 votes
    9y
    Ian Walsh Thanks! My question kept changing...but I guess it comes down to mortgage lender, broker, or bank?
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  • Victor SoBusiness Member
    OP
    Real Estate Agent · Chicago, IL · Member since 2017 · 325 posts · 193 votes
    9y
    Christopher Phillips Thank you for the clarification! Helped a lot!
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  • Victor SoBusiness Member
    OP
    Real Estate Agent · Chicago, IL · Member since 2017 · 325 posts · 193 votes
    9y
    Eric James I'm struggling with that question too! I hope someone helps answer this for us!
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  • Jim BlackburnBusiness Member
    Lender · Florida Based (48 states Puerto Rico) · Member since 2017 · 321 posts · 121 votes
    9y
    Victor So it's best to go to a high volume direct lender that lends at wholesale prices vs the retail price you get at a bank. Get a Loan Estimate from your bank and get a quote from a reputable high volume direct lender and put them side by side on your kitchen table and go with the best one.
    954-993-1625
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  • Merritt Noel
    Lender · Denver, CO · Member since 2016 · 51 posts · 27 votes
    9y

    @Victor So What you want to look for is a correspondent lender.  With a correspondent lender you are getting the best of both world i.e. wholesale prices and they have number of different investors that they work with to fit your specific loan scenario ensuring you get the best product as well as the best terms.  Typically they have very strong relationships with the underwriters and can things done in a more timely fashion and you should get better customer service.  This also gives them more flexibility when funding loans should one or two minor conditions still be outstanding as they are funding loans with their money. 

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  • Merritt Noel
    Lender · Denver, CO · Member since 2016 · 51 posts · 27 votes
    9y

    One last thing I forgot to mention.  With a correspondent lender you should not incur any fees outside of the norm.  They should be similar to a traditional bank. Underwriting, processing, doc prep? is typically what you will be see with banks and correspondent lenders.  It is the brokers that you will see the origination or discount fees as charges.  Good Luck!

    2Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    9y
    Originally posted by @Victor So:

    Ian Walsh Thanks! My question kept changing...but I guess it comes down to mortgage lender, broker, or bank?

     Market forces keep it all competitive. If that weren't the case, one of those channels would cease to exist. Work with a competent professional local to the state where you are investing, don't lose sleep over titles. 

    The big difference you see is in service, speed, and reliability, which is where the companies that do one thing and one thing only -- mortgages -- come into play. I am of course a biased source on this, but that (and stupid cross selling quotas) is why I do not work for a big bank or credit union.

    1Reply
  • Harjeet BhattiPro Member
    Lender · Glenview IL- CDLP NMLS#230554 · Member since 2015 · 2k+ posts · 747 votes
    9y

    I have work in all the channels of  mortgage industry, I don't see much difference in closing cost wise.  Make sure when they are pricing, what you are paying to get that rate. 

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  • Victor SoBusiness Member
    OP
    Real Estate Agent · Chicago, IL · Member since 2017 · 325 posts · 193 votes
    9y
    Jim Blackburn Thanks! Will definitely look into it.
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  • Victor SoBusiness Member
    OP
    Real Estate Agent · Chicago, IL · Member since 2017 · 325 posts · 193 votes
    9y
    Harjeet Bhatti Chris Mason Thanks guys!!
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  • Victor SoBusiness Member
    OP
    Real Estate Agent · Chicago, IL · Member since 2017 · 325 posts · 193 votes
    9y
    Merritt Noel Awesome! Will definitely look into it!
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  • Franklin Romine
    Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
    9y

    I prefer a direct lender.  But most importantly a loan officer that has knowledge and has some cojones.

    Franklin

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  • William C.
    Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    9y
    A broker will have many options, but may charge a brokers fee. Iv been told the brokers fee is paid by the lending bank so it's a wash for you the borrower. A bank is going to be limited in the products they offer. For example TD bank can only give you TD bank loans, and won't be able to outside the box. A direct lender is kind of a hybrid of both. They lend money directly from their own fund, but can offer a range of products, but not as large as a broker who has different lenders to chose from. It kind of depends on what you are looking for. If you are in fact looking for a conventional loan, then all 3 shoud be able to meet your needs. I'd be curious to see exactly what the 1100-1300 fee you are talking about is. Almost all "lenders" will charge an "origination" fee, "application fee" or something along those lines. Most junk fees are negotiable. If you find a lender you like and want to use but they are charging $1000 the other guy isn't. Tell them, they probably find a way to waive it. Rate is a whole different story. As mentioned before you can get a different rate depending on a whole slew of things. Points, credit score, down payment, etc. the lowest rate doesn't always mean the best deal. I can get you a 3% rate if you want it, you just have to pay for it up front. Same goes the other way. You could take a 5% rate and he lender would actually pay you money to take it. Rates are affected daily. Don't get caught up shopping rates around. You should be able to get similar rates everywhere as long as your comparing apples to apples.
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