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A friend recommended a mortgage broker, he’s been very helpful and nice. He wrote me a pre qual letter, and quote for breaking down month payment and closing costs. He also made it clear I’m not charged for his services, he takes his commission from the bank. I’m not obligated to use him even though I feel it be wrong to take his time then near the end cut him out and get my own loan. The home seller has accepted my offer and now we are approaching the loan part. All I want is to make sure I’m getting the best rate. Btw, I have a great credit score, a good deal of cash in the bank. I also want a 30yr fixed. He said the rate would be 3.5%
My understanding is mortgage broker gets a lower whole sale that a consumer couldn’t get and makes his profit between the two.
My understanding is mortgage broker gets a lower whole sale that a consumer couldn’t get and makes his profit between the two.
My understanding is mortgage broker gets a lower whole sale that a consumer couldn’t get and makes his profit between the two.

4 Thoughts on Mortgage Broker vs Directly dealing with a Bank?
  1. Beverly S
    February 4, 2014 at 7:41 pm

    He should have given you a Good Faith Estimate with your closing costs on it. Get one from a bank as well & compare the 2. Banks usually take longer. 3.5% is good for a 30 year fixed- but look at closing costs too.

  2. Carol
    February 4, 2014 at 8:35 pm

    Well you can get pre qualified at a bank also then choose which you want to take there is a progrm where # are punched in and its a fast simple process for the broker and banker its the approval that takes time and who do you trust? for often with brokers any misdeeds are not found out until years later when you have a tangled mess

  3. Glenn S
    February 4, 2014 at 9:06 pm

    You pay the commission to a mortgage broker one way or the other. The mortgage broker charges you a higher interest rate and the bank passes the excess profit to the broker as commission (about 2%-3% of the loan amount depending on how much the broker is over the par interest rate). Generally Direct Lenders costs and commissions are lower than a mortgage broker.

    Mortgage Brokers DO NOT MAKE LOANS. The have no control over you getting the loan. All they do is package your loan and shop it around to various Direct Lenders. Essentially they are nothing more than middlemen.

    I would not go directly to a bank even though they are direct lenders, especially large banks like Wells Fargo, BofA, or Chase. They offer poor customer service. There are mortgage companies that are Direct Lenders and they often offer lower cost loans and good service.

    I would go on line and contact Quicken Loans and ask them for a quote. They will take your application over the phone and will have an answer within 12-24 hours. It won’t cost you anything. They have excellent customer service and low rates and close most of their loans with 30 days. I’d bet a buck that they will beat your mortgage broker by at least $ 1000 and with a lower interest rate.

    The only reason to use a mortgage broker is if you have either credit issues, self-employed, or some other problem. They can shop around and can often find a lender that is willing make a loan to a marginal borrower.

  4. Galaxie Girl
    February 4, 2014 at 9:20 pm

    Better to deal with a mortgage broker. I’ve done it both ways, and I found that the broker can get you a better interest rate/deal than you can find on your own, trying to contact different banks yourself.

    Since you already have an offer accepted with this broker, stick with him.

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