It has come to our attention that many home mortgage hunters do not quite understand the differences between a mortgage broker and the loan officer at their bank. Today, our blog is focused on telling you more about those differences.
On the one hand, the mortgage broker acts as a channel between the borrower and many lenders. This means we can investigate many loans and help you choose the best lender for your situation.
On the other hand, the bank officer works for the individual bank; they are primarily interested in selling their employer’s mortgage products.
What is the reason many people do not understand this? One reason borrowers do not even consider a mortgage broker is possibly that brokers in general absorbed a lot of undeserved criticism for the housing crisis. “According to the Washington Post, mortgage brokers took a lot of undeserved heat for the housing meltdown, but consumers need to know that using a broker is still one of the best ways to shop for a mortgage.”
As we recall, there have been a number of unethical bankers in recent times, also. Bankers or brokers, the individuals in either group are no longer on the financial scene, so it’s time for a fair treatment of the “much maligned” mortgage brokers.
At a recent Florida Association of Mortgage Professionals meeting, a speaker stated, “I have found as a consumer I get a lot more out of a good broker than I’m ever going to get out of a retail loan officer at a big bank.” One reason for this is that brokers are permitted to shop around and compare several lenders, whereas the bankers work in concert with only their bank.
A Short Short Story: Loans And Winter Coats
This major point bears repeating through an analogy. First, imagine that you and your spouse are shopping for a home and a mortgage. Now, let’s imagine for a moment that shopping for your house can be compared to shopping for a pair of fine winter coats.
On the one hand, you could spend your entire Saturday afternoon going to five major department stores, comparing deals on coats. On the other hand, a professional personal shopper would have access to many more stores and to specialized information about their deals. You can think of your mortgage broker as your personal shopper, and your banker as an employee of one of your favorite stores.
Another way of putting this is that the loan officer is only a cog in the wheel of the big bank, whereas brokers “…are basically small businessmen. They survive on their reputation, on word of mouth.”
This blog is an attempt to clarify what it is that good mortgage companies do; we want to combat the general lack of understanding of our job here at Palm State. Below are a few of the basic points:
1. Brokers must be licensed by the state as well as the federal government.
2. They also must strictly adhere to many rules and regulations regarding full disclosure of all the details and fees concerning your loan and the lender they help you choose. We covered an example of this in our most recent blog.
3. Mortgage Broker Originators have a greater ability to place mortgage loans to the satisfaction of Borrowers. Mortgage companies follow “the trends, know what mortgage products are available and are aware of which institutions might be offering special discounts.” Furthermore, a broker might be aware of “exclusive deals that are not offered on the open market.”
At Palm State Mortgage, we consider it part of our job to identify the most appropriate lender for the specific circumstances of a borrower.”
4. Mortgage brokers have much more transparency than banks. In the words of Pearl Lefkowitz,
President of Palm State Mortgage, “Brokers must disclose at application how much they will earn on that loan, and are not allowed to earn more than what is initially disclosed.”
She added, “However, bank originators do not need to disclose how much the bank is going to earn at application, nor at closing. It is never disclosed to Borrowers. Therefore, they and their institution usually make more, and save Borrowers less.”
5. Mortgage Brokers attend continuing education every year.
6. Bank Loan Officers are not required to have licenses nor to attend continuing education.
7. In all fairness, we acknowledge that Bank Loan Officers have rules, but they are different from the rules mortgage brokers are required to follow.
We ask the public to avoid being blinded by the glamorous branding and elaborate multi-media advertising created by big name banks and online banking systems. They might not understand your personal or local needs. We agree that “Mortgage brokers are like a matchmaking service: They match you, the borrower, with a lender. They review your personal financial information and look over an array of lenders and try to match you with one who will give you the best rate and terms.”
We invite you to visit with us by phone or email for more information about how Palm State Mortgage differs from your banker, and incidentally, how we differ from other mortgage companies. We predict you will be pleasantly surprised by our professional knowledge, personalized style, and the money we can save you.