First time Home buyer

8 Replies

Mortgage brokers on here will argue that getting the cheapest rate on your mortgage will save you so much money, the fee they charge to be in the middle is well worth the cost, but in an environment like the current housing market, which has touched roughly the entire US, where you can throw a dart at a rate quote and get under 2%, mortgage brokers aren't worth the cost.

If things tighten up and banks really start raising rates, that answer could change. Work direct. Save money. Best of luck!

Originally posted by @Willy A German :

What’s ideal for first time Home buyers, work straight with a conventional bank or a Mortgage broker?

Either work. Depends on what you are looking for but at the end of the day most FTHB wants guidance and competitive rate. No one can claim they have the lowest rate, as there are over 1,000 lenders in the Nation. You can spend time every single one to try and get the "lowest" rate and in that time miss out on buying something.

In the current environment working with a reliable team of agent and lender goes a long way to ensure that you’re successful in your new journey. 

Have fun and best of luck to you as you set out in your journey 😀.


 

@Willy A German 5-6 years ago my now Ex was a real estate agent and the mortgage broker she worked with knew about all sorts of mortgages that the banks did not and would get her clients into loans despite bad credit or debt or whatever. I’m not sure what types of fees the broker charged however. I believe this one got paid a set fee from the lender of the product he sold as opposed to being paid by the buyer.

Personally, I make a fairly low base salary, around $35,000 but own my house outright and have a little cash to use for down payments. I went to my local bank that I’ve been with for 22 years and applied for a mortgage with them in January and it was simple and easy and I got approved.

I’m now back with them again applying for a second mortgage at a slightly higher rate as rates are going up and once again they’ve been helpful and it’s been simple. I’m still waiting on a few documents that have changed on this one for further approval.

This bank services their loans and does not sell them off which I like. That is one of the reasons I didn’t shop around further.

@Willy A German

Honestly, I think neither.  You should probably look into working with a mortgage lender.  That is, not a mortgage broker who going to find a mortgage lender to sell you the loan, and not a deposit bank (like a Chase, Wells Fargo, Bank of America, etc.) since after the Dodd Frank Act their originations are a third of what they were doing before the last depression.  The mortgage lenders from the last stats I saw have taken over the market and giving better rates, sometimes much better rates.

As mentioned above, you might want to inquired about what percentage of loans the lender services.  I do agree that is important.  I had one loan where the servicer was only available 9-6 which sucked since I had a salary job and could sit on hold for an hour like that...  Please realize that really all conforming residential loans get resold on the secondary market.  However the servicing function (who collects your payments, sends your statements, sends your 1099, etc.) may not change.  That statistic is generally available from the lender.  Yes, deposit banks generally will service the loans they originate since that's part of their marketing strategy.  

Good luck.

Willy,

Interesting points of views here.  I am a mortgage broker in Texas.  Several very valid points from the responses above:

Brokers have an advantage by working with multiple lenders, meaning we do the shopping around for you

We cannot not, nor anyone else can, claim the best rates.  We are very competitive, as are others.

I will not agree that the lowest rate is the best loan.  Often times, a borrower can take an 1/8th higher rate and get lender credit to help cover fees and closing costs.  This is beneficial upfront but only for a few years into the loan when IR then takes over and begins to actually cost you more... all ~$27/month more...

Every broker is different.  We are very transparent with our comp plan and how we get paid.  We charge the lender 2.25%.  This will result in an increase in the rate they offer the borrower as a way to recover some of those costs.  90% of our loans are done as lender paid.  The borrower does not directly pay us.  Most brokers will NOT tell you their comp plan.  That's one big way we are different.

Any government backed loan (Fannie, Freddie, and Ginnie) are subject to sale on the secondary markets, in fact, you can bet they will get sold.  Regardless of whether you are a broker or not, government loans will likely get sold unless you are borrowing from a loan servicer, even then, they may still sell it.

We offer white glove customer service as well.  I am the central point of contact throughout your loan journey.  App to Funding.  You wouldn't get passed from person to person.  I do what I do to make your journey as stress free as possible and ensure you are getting the best loan for your situation.  If I can't offer that loan, I will tell you.


Hope that offers another point of view to your questions.  One thing is for sure.  Shop around and ask lots of questions.  Rate is not everything.

Nick