Borrowers: Mortgage Broker or Direct Lender? - YouTube

Well hi there, I'm Michael Hausam of The Hausam Group at Vista Pacific Realty. So

the question I want to address today is whether you as a homebuyer or a mortgage

borrower should use a mortgage broker or a direct lender. What's the best place to

go to get a loan? Now as far as definitions go, a direct lender is

somebody, an institution, that's lending their own money; whether it's a bank like

Bank of America or Wells Fargo or Chase or a mortgage banker, like Quicken Loans

or Loan Depot. a mortgage broker is a completely different animal ;that's a

third party intermediary, who's basically taking your loan package and taking it

to a direct lender. So what's the best one to use? Well in my background, as I've

mentioned before, I started out in the real estate business on the mortgage

lending side. I first worked for a finance company, that was a division of

an automotive company that made mortgage loans; and then I went to work for a bank

and then I work for two different mortgage bankers, and now I can broker

loans as a mortgage broker. So the quick answer is: the best place to get a

mortgage loan is through a mortgage broker. 'Cause that's what I do!

But as self-interested as that answer is, it's also the right one, as far as I'm

concerned, because I have my license with a mortgage broker because I want to be

able to obtain the best possible financing for my clients. But there are

reasons for that. Consideration number 1: your profile. If you've got extremely

good credit and your income and assets are very simple, you can basically get a

loan from anywhere. But if your circumstance is more complicated, if your

credit isn't great, if your tax returns are complicated or your employment is

complicated or your assets are complicated, then you might have a

difficult time finding a direct lender who will make that kind of loan. A

mortgage broker will have the experience and probably dozens

of different avenues to take your loan. So that's the first consideration. Now

the 2nd consideration is the type of loan that you want. If you want to borrow

six hundred and seventy nine thousand six hundred and fifty dollars or less

and you want a standard thirty-year fixed-rate loan, that's a Fannie Mae

Freddie Mac agency loan, and everybody makes those loans. But if the loan you

want or the loan you need or the loan that you qualify for doesn't meet those

requirements, it's a little more complicated. If you've got credit or

asset or income issues, you're probably not going to be qualifying for a Fannie

Mae or Freddie Mac loan. Nn that case it may be difficult to find out which bank

will make the loan for you. Also some borrowers have extremely unique profiles

as far as high net worth individuals, and they want to cross collateralize

brokerage accounts, other properties, significant assets that they have and it

takes a custom high-end private banker to make those loans. I also had a

circumstance recently where a borrower tried to see if I could match a rate and

quote given to them by their credit union. Well at that time their credit

union was offering a special promotion for people that were in the ministry - the

wife worked for a church - and a different promotion for people in

education and the husband was a teacher. They also had a special credit with

their credit union because of the time that they'd been members of the credit

union. Well the circumstances in that situation were such that these borrowers

got an amazing deal that wasn't readily available in the marketplace.

Consideration number 4 is the transaction itself. Where is the loan

going to be handled? Maybe you're not aware and haven't been paying attention

to the mortgage business like I have lately, but Wells Fargo and Bank of

America and Chase have all announced a ton of layoffs; they're consolidating

operations. I just ran into this with a buddy of mine

that had a really good relationship with the lady at his local B of a branch.

Well he was talking to her about getting a loan, but it turns out that other than

just taking the loan application itself, a hundred percent of everything that was

going to be done on his loan was handled out of state. The people would've had no idea

who he was and, more importantly, no idea about what was going on here in Orange

County real estate. The other issue that came up with that loan is that this

particular banker didn't have any idea what a conditional loan approval was.

It's something that I use in my real estate business extensively and that's

the type of loan that you get a borrower completely underwritten by a human

underwriter; the loan is completely approved before finding a house. Well, B

of a won't do that type of loan. They would give a pre-qualification letter

but they wouldn't get anybody to sign off on the loan. Well that has an impact

on the transaction. So we ended up not using Bank of America because they

couldn't help us the way that we needed to be helped. Also another consideration

is if you're using a local mortgage bank or local mortgage broker and the

representative is right here in the county, there's some pressure that can be

brought to that individual that wouldn't necessarily be the case if you just pick

up the phone and talk to somebody way off in Michigan at Quicken. Being a real

estate agent (and I'm here at an open house right now) it's very common to have

mortgage bankers and mortgage brokers come in here to the open house to try to

get business from me. Well can you imagine if I'm in a transaction with one

of those mortgage bankers or mortgage brokers and something goes sideways, it's

not just that one transaction that they're gonna be thinking about. It's all

the other transactions that they're hoping that I'm going to send to them

and you as a borrower can benefit from that situation.

Whereas if you're on the phone to some 21 year old recent college graduate

that's got a headset in the cubicle outside of Detroit and you're one of

seventy-five people and his pipeline, your tragic circumstance or urgency

isn't gonna mean quite as much. And that could impact you in your transaction

Consideration number four is simply costs. And let's be honest ,when it comes

down to it, the question that's always asked is not, "How good is your service

and where is your processing center located?" It's, "What's your rate and fees?"

So let me give you a little bit of a tutorial on how it works for mortgage

bankers. Their loan officers are given their rate sheet, "This is today's rates

and this is what you have to go out into the marketplace with," and if you're

dealing with one of those individuals, they have their rate for the day and you

get that opportunity, whereas with the mortgage broker

I'll get 75 or 80 different lenders who are all competing for my business. So

what happens is they because they don't need to pay a loan officer and have

office space and all that for a retail branch, they're delivering on a wholesale

basis; so they deliver dramatically lower rates to me as a mortgage broker and

then I, seeing all of these different lenders competing against one another,

can figure out the loan for you and the price for you, as these guys are all

trying to fight it out. You then benefit; so that's one huge advantage that a

mortgage broker has, is that at the click of a button, literally the click of a

button, they can do far more shopping effectively then you can do picking up

the phone calling all over town and comparing rates. Now for my particular

clients, what I do if I'm representing you as a home buyer,

I offer substantially discounted origination fees; as for me the loan

piece isn't the way that I make my living. The loan piece is the way that I

make sure that my clients get the best service, the best terms,

and the best performance, so that their transaction holds together. It's

absolutely impossible, other than in the most unique of circumstances, that I

can't dramatically undercut the costs and fees of any mortgage banker or

mortgage broker for my real estate clients. So if you'd like to learn more

about that or if you'd like a simple rate quote, you can call nine four nine

four one three two three seventy one. You can email me [email protected].

also right above my head there should be a little round button with an 'i' when

you move the cursor; click on that and that will take you to my website and you

can get more information there, as well. Lastly, please follow and subscribe to

this youtube channel. I very regularly do advice for borrowers, for home buyers,

and home sellers; tips and other little things to help make your real estate

experience easier and happier. Thanks so much for watching and have a great day!