Buying A Home
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Mortgage broker
Just wondering what experiences people have had between going through a bank verses a mortgage broker. We've met with the bank and they approved us for a mortgage with a 2.99% variable rate for 5 years.
What can a mortgage broker do for us that the bank cannot?
TTC since September 2012
<a href="http://www.thenest.com/?utm_source=ticker&utm_medium=HTML&utm_campaign=tickers" title="Home D
Re: Mortgage broker
We originally got pre-approved by our bank (Wells Fargo) and then got pre-approved by a local mortgage broker. The local broker was superior for a few reasons:
- The institution he was with was highly regarded by agents and they had a reputation for making closings happen on time.
- The same person was available to us evenings and weekends and had great turn around time. With WF we often had a substitute.
- Their rates were better.
If you're in a competitive market, it might be good to ask your agent for a suggestion. The reason we got the second pre-approval was because we were in a multiple offer situation (five offers on the table) and the listing agent didn't like dealing with WF. They wanted us to get the additional pre-approval from the other company.
ETA: Also, there have been a lot of people on here who didn't like their lender. I LOVED our processor and our sales guy. They prepared us well and I knew exactly what I would need to give them for the underwriters. They were so great in helping us get through the process and making it as stress free as possible. If by some chance you're in the suburbs of Philadelphia, let me know and I will happily pass along their info.
Are you in the US or Canada? Just wondering since you said a variable mortgage for 5 years as I think canadian mortgages are typically 5 years or so.
If you are in the US I would strongly advise against a variable mortgage. Rates are a the absolute low and I'd take this opportunity to lock in a 15 year (I saw some today for 2.85 and 3%) or a 30 year (3.75-4%). In 5 years, rates are going to be higher and I would do everything I possibly could to lock in a fixed rate at these historic lows.
We live in Canada. I've only recently been following the market as I'm new to this. We were told variable rates end up being better in the very long run, at times we'll pay more than fixed but overall it ends up working in our favor.
So far everyone I've spoken too has said go speak to a morgage broker as they will get you the best rate possible, but my realtor kinda of talked me out if yesterday. I couldn't understand her definitive reason as to why though. Basically she said there's some good ones and some not so good ones and to tell who I decide to speak to and she'll tell me if I should steer clear. I should also mention my realtor is a acquaintance/friend.
IDK about Canada, but there are a few differences as far as the US is concerned. I would assume this would be similar in Canada.
In the US, loan officers that originate loans for banks like Chase, BOA, etc, do not have to be licensed to originate loans. Some banks MAY have recently changed that (Citi), but I know Chase doesn't mandate it (I have a friend with nasty credit who is a loan officer).
Broker shops sometimes tack on excess fees like underwriting fee, processing fee, etc. You can ask for these fees to be waived, but that generally means you are not getting the best rate. That's what is meant when you hear about loan officers making "money on the back end".
I live in Canada and mortgages are very different here than in the US, but I agree with Jen&Jeff06.
Interest rates are at historical lows, the variable rates are likely to go up, not down over the next 5 years.
If you have a 5 year variable rate, currently at 2.99%, you could choose a 5 year fixed rate for 3.29%. This rate is not much higher, but it is guaranteed for the next 5 years.
There are lenders offering 5 year variable rates as low as prime minus 0.15% (2.85% today).
The advantage of a broker is that he has access to many different lenders and can help you to compare the different options available through different banks. When you deal with 1 bank, they are only going to compare products that are available through them.
Good Luck with your home purchase!
Steve
http://www.home-equity-loan-strategies.com/calgary-mortgage-broker.html
When I first spoke to the bank I was not interested in a fixed rate because they said they would lend almost $100 000 less than if we signed a variable. I know it is dependent on interest rates, but that is a huge difference to me. Is this normal?
A mortgage broker acts as an intermediary who brokers mortgage loans on behalf of individuals or businesses. Traditionally, banks and other lending institutions have sold their own products. However as markets for mortgages have become more competitive, the role of the mortgage broker has become more popular.
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