working with mortgage broker?

Question

Just talked to one.  Lender pays for broker's service.

Broker can shop for terms and rates for me, instead of I apply with only one lender.

It is a good way to get good deals?

I need to do a REFI and condo mortgage.

Marty Johnston · Answer

@David Smith you're probably going to see a LOT of answers and opinions on use of a Mortgage Broker here on BP. If you do a search for "Should I use A Mortgage Broker" you're bound to find hundreds of threads on the question. I'm of the personal opinion that it really depends on the person. A mortgage broker is most commonly paid by a broker fee, from the borrower, at the closing table. On refinances, their fees can be covered from your equity (assuming you have the equity to cover it). Some lenders pay brokers YSP, which can mean an increase to your interest rate, but lower closing costs. Some brokers do this to look like they're very affordable (and albeit, some brokers DO have lower charges than others), but all brokers are based on loans funded, and most paid at closing, rather than out of back-end yield.

Brokers who are good can quickly identify best options for your financing needs, present multiple quotes, distinguish your 'end goals', and help guide you to a product both now, as well as an exit (if applicable) to achieve said goals. Good Brokers make a living through referrals and happy previous clients, meaning marketing doesn't mean much! They're the professional at finding the best option for multiple scenarios, rather than a direct lender who has their "box", and that's it usually.

If you like options, and you're willing to pay a professional to not just push papers but help advise you, a mortgage broker to most people is WELL worth it.

Hope this helps!

Chris Mason · Answer

I switched from mortgage banker to mortgage broker Q1 2019. At the time my motivation was that the market had shifted, and as of then an a-hole 3rd party broker could broker a loan into the company I worked for, have their 1099 compensation 100% covered by the company I worked for, and the consumer got a better deal than what I could offer as a W2 employee of said company (Ya know what else 1099 folks get? Write-offs). And that was a shift, it wasn't always like that, and may not be like that in the future. Broker v banker depends on when you are asking. Mid-2018 going into 2019 was a rising rate environment, I've been told rising rate environments tends to favor brokers just b/c their/our rates don't go up as much due to less build-up of overhead and sales management hierarchies, and so far this cycle that's true again, but who knows.

That's what I came for, but there's much more that I like better. A mortgage bank or direct lender generally has one value proposition. Here's your rate, here's your fees, here's the turntimes, boom we're done. OK. But what about when you find out with 1 day's notice that you have a seller that doesn't want to close for 75 days b/c family reasons? On the broker side, we can pick a lender that has their stat points dumped into pricing or flexibility, at the expense of being slow. Or when there's that seller that really wants a fast close? Great, that lender exists too.

Remember your favorite RPG or MMO? There is no "what's the best class," healers are good for some things, and warriors for others, and hunters yet for other use-cases. And even within one class, there's different specs. Good at dealing damage v good at taking damage. On the mortgage broker side of things, I get to have my cake and eat it too. I get to be this gal's speed demon, and moments later the low rate champion that the flipper (who doesn't give a crap about rates, just fees) needs, and moments later here comes the first-time buyer who needs it fairly well balanced, but all on easy mode. No more being a one trick pony, and no more having to sell something that isn't a model match for the use-case at hand. The big trade-off of being able to "have my cake and eat it too" is that there's no kiddy gloves, no hand-holding, no "daddy daddy I can't figure this scenario out, can you help me?" - so you really can't make that switch until you've got several years of experience under your belt (also no subsidized healthcare, no 401k match, etc, so you HAVE to produce more to make up for it -- but that shouldn't be hard....).

Jon Kelly · Answer

@David Smith Mortgage brokers can be extremely valuable if you don't have an existing relationship with a lender. They will do all/most of the leg work to find the best option for you. In my opinion, after you own a few properties it's best to build a relationship with 1 or a small group of lenders. You want to have a trustworthy lender that knows your investment strategy and financial situation.

working with mortgage broker?

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