Broker Vs Banker - Which is better?

If you have a financing loans whenever you buy a house or refinancing, it is likely that you have used the services of a mortgage broker or mortgage banker.

What is the difference, you ask? Good question! A mortgage broker is approved with several lenders direct lenders to provide that credit, and earned a fee for it (usually by the consumer and / or the creditor). A mortgage broker does not actually give money,simply arrange the financing.

A mortgage banker also arranges financing, but a mortgage banker actually uses his credit (usually a line of store credit) for loan funds and then sell them as a loan closed in the secondary market to the highest bidder for the loan and give criteria. In many cases, the final buyer of the loans' have been chosen before the loan is self-financed, with the risk ... rather limited.

In theory, a mortgage bankingnormally have access to prices a bit 'better because they are eliminating the average man, but that has changed in the current market conditions. Right now, mortgage brokers usually have access to the same rates, mortgage lenders can offer this.

What does this mean for you? This means that you can just as easily by an agreement, and in some cases, perhaps a better deal from a mortgage broker, as you can with a direct lender. A direct lender may be very limited in its mix of loan products or qualification guidelines, but a broker is usually the price of access to various funding programs and policies are given the best chance of approval for the better.

The collapse of the mortgage lending this year, the average is a choice to make mortgage brokers debacle as the scum of the earth and the source. The community mortgage brokers are not part of the responsibility. Though> Mortgage Broker does not create the loan programs and / or guidelines, are easy to deliver them to borrowers who want it. There are many brokers in the business world who are naive consumers in loan programs that rely too aggressive, without providing any information of the details of the loan. will Fortunately, most of the brokers who have the agreement and they all left the store with experience and probably will at that time, storms.

The key toThey determine that the work is primarily a function of the real mortgage rate your experience, intellect and integrity. As in any service, personal recommendations are usually the best. Moreover, just follow your instincts and do not be afraid to ask questions. If you answer also unacceptable, so you probably need to switch to another job.

Why Lenders Are Not Your Friends - Part 1

Copyright ฉ 2006 Ed Bagley



The next time you go borrowing, and your friendly banker smiles as you walk into his office, be aware that you may be snookered by someone not worthy of your trust. If your banker is an attractive woman, then you are even more susceptible.



I have grown over the years to appreciate a certain breed of bankers as one of the lower life forms that inhabit planet Earth. What I am about to share with you is even more true of certain mortgage brokers, secondary lenders and financial predators.



They operate as sleazy parasites under the guise of helping the least credit worthy consumers who have virtually no savvy in financial matters.



Rather than pick on the worst of this collection of lenders who will help relieve you of your money without any conscience, I have targeted bankers. Before the banking industry was deregulated there were many people who considered bankers worthy of some trust and admiration. Those days are over.



Bankers still enjoy the best reputation (such as it is) among these lenders, but they have no problem patting you on the shoulder while picking your pocket and telling you how much they have helped you.



I do not intend to indict the entire lending industry, just 95% of it. Here is an example:



My 24-year-old son wanted to refinance his first mortgage and was about to go to a leading lender in the market to look at its loan proposal. I decided to tag along because I know how lenders operate, especially when dealing with younger clients and senior citizens who have not handled the finances in their family.



His present loan had a principal balance of $123,773 with 7.458% interest at a 30-year fixed rate.



The proposed re-fi was for $134,999 with 9.9% interest (10.28% APR) at a 30-year fixed rate. The re-fi would cover the $123,773 principal balance due and provide a $10,409 home equity loan. The lender was actually smiling when he outlined what a good deal this was for my son.



I had coached my son to simply listen to the proposal, commit to nothing, take the paperwork with him, and tell the lender he would study the proposal and let the lender know if he wanted to proceed.



Once away from this flytrap I took my son to lunch, and we discussed the great deal he was given.



First, I had him look at the 3% discount fee on the Good Faith Estimate of the closing costs. (The discount fee is the amount you are paying for the privilege of getting the loan.) The discount fee was listed at $312.



What the lender was not telling him was that the 3% discount fee was figured on the $10,409 home equity loan and not on the $134,999 for the total loan which was $4,050, a slight difference of $3,748 in their favor.



If you called the lender on this discrepancy, he would probably say, "Oh, you're right, that's a mistake.



That's the figure for the home equity loan. Jeez, I'm sorry."



When the day comes to close the loan, you see the bloated figure and object, and then the lender multiplies the $134,999 loan times 3% and viola, it comes up correct. You are dazed and confused, feel under pressure, want to get this over with and sign on the dotted line. This happens every working day in America when loans are closed.



Long after you are gone, the lender is quietly snickering, counting up the additional funds he will earn, and welcoming the next dumb bunny who comes through the door while you will be stuck with making payments for 360 months on a lousy loan.



For the uninitiated, there are more real surprises at loan closings in America than when opening gifts on Christmas morning. One client of mine went to a loan closing and learned that $10,000 had been added to the loan closing costs without prior notice; he thankfully got up and left.



Always remember that for every liability you have, you are someone else's asset. For every liability-such as a mortgage, credit card, car loan or school loan-you are an employee of the company lending the money.



If you take out a 30-year mortgage loan, you have become a 30-year employee of the company which lends you the money. This is a very sobering thought when you are paying attention, as you should be. I am not talking about anything important in this article, just your financial health.



Part 2 of this article will take the financial details of the loan apart and show how not taking the loan will save my son $157,495.