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[#241] Correspondent Lenders vs. Mortgage Brokers – Which is Better? - YouTube
Channel: HyperFast Agent
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What's up hyperfast nation on
this episode The hyperfast
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mortgage Blitz, I am talking
with Dustin Brown, the one and
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only Dustin brown about the
differences between
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correspondent lenders and
brokers, and the impact that
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could have on you as a buyer or
your buyer clients if you're an
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agent. So stay tuned.
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Alright, Dustin Brown, we're
back a lot of different types of
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lenders out there. There's
banks, right? I think everyone
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knows, like, those are the guys
that take deposits and lend.
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Most lending, though, I think
happens, at least at least for
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the agents on our team, our
buyer clients tends to be
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through brokers or correspondent
lenders. And old Not a lot of
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people know the difference
between them. So what what is
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it? Which one, are you and why
is that better?
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Good question. Yeah, a lot of
people don't know, a lot of
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people just think everybody's a
mortgage broker. So differences,
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a mortgage broker is taking
application from a client. And
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they're basically sending it out
to a bunch of different
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investors, right? So they're
going and passing it out to
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those different entities. The
correspondent lender is taken an
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application from a client. And,
of course, my lender is going to
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underwrite, process and fund the
loan themselves. They don't
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service the loan, but they will
do everything up to that point.
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So that's a major difference, if
your
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clients or correspondence gonna
actually fund it. Right? And
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then they're, and then they're
gonna go do what the broker does
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and get it off the books. Right.
All right. So how does that
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affect the buyer?
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Yeah, there's a major advantage
to working with correspondent
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lender, because the
correspondent lender has control
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of the underwriting of the
processing, a mortgage broker,
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they may have different options,
but once they send the
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information to whoever the
investor is, they're now
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basically working with their
underwriting department and
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whatever company asset you know,
they have, you know,
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yeah, and on the flip side, so
I've worked with both and just
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to tell people a little personal
experience, I've worked with
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both. And last year, we had a
deal on one of our condo deals.
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So we've got over 100 units, 100
Canada units in our development
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pipeline, one of those which I
really liked this project, 10
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unit building, we had it lined
up with a lender that someone
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brokered for us. And yes, it was
through this certain bank, and
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most of our interactions prior
to that had been with the
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broker, then they're like, hey,
do you like the flow? Yes. Okay.
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Now, they put us in charge of
this bank, and it didn't make it
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through their underwriting. So
luckily, the seller agreed for
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an extension, and we found in
another bank to do it. But, you
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know, once it was with that
underwriting department, that
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that broker, you know, he had a
relationship there and can give
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some input, but it was really
out of his hands. So I think I
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think that's, to me, you may
think, well, at the end of the
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day, they both send it to
someone else. But having your
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own funds and your own in
underwriting team to get that
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deal closed. Is all the
difference in the world.
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Absolutely. And, you know,
there's scenarios that come up
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with clients, right, there's
late payments, there's credit
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issues, there's a lot of
different they say every client
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is snowflake, a fingerprint,
right? So, you know, being able
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to say they're not the same.
Yeah, exactly. You know, being
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able to have an in house
underwriting team, you're in
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direct communication with them,
right? These are people that
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you're working with on a daily
basis, you know, them you have
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their phone number, right. So
it's easier to communicate with
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them if there is a unique
scenario, which we know, happens
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a lot. Right? So you know, and
then on the same side, I mean,
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on the upside of your client, it
helps. But if you're an agent,
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right, a buyer agent, working
with people that you know, and
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trust that you've done this with
many, many times and have
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control over, you know, over the
process is also going to help
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you and help you know, your
pipeline and everything runs
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smoothly, and that's what we
want.
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Is there any advantage to go in
with the broker? there?
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I mean, a broker has a lot of
options, right? They're gonna
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have a ton of different rates, a
ton of different banks that they
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work with. You know, Sometimes,
if you don't like so, for
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instance, if you can go directly
to Fannie Mae or Freddie Mac, if
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an interest rate is eighth of a
percent higher and you're going
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directly to Fannie Mae, it might
be worth it to do it, because a
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different investor with a lower
rate might have different
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underwriting requirements.
Right? So, you know, they might
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ask for more tax tax returns,
or, you know, just they want to
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dig deeper into the scenario
where if you go straight to
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Freddie or Fannie, that
underwriting might be easier. So
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it might be worth paying that
extra. And a correspondent
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lender can work directly with
Freddie and Fannie, I
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think, I think you hit the nail
on the head there, sometimes the
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rate can be better with a
broker, the promise three,
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exactly. The problem is, you
know, there could be points or
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this fear, that fear or
something that gets thrown on
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the end that they need to, or,
or you could just lose it like,
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like the I had, right where
they, it doesn't make it through
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underwriting. So if you've got a
great investment property, if
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you've got a great home that you
want to move yourself or your
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family into, and you're talking
3%, verse three and an eighth,
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or even three and a quarter, in
my mind, the risk of not losing
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the deal. is better than that
potential, like eighth of a
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point that maybe you save with,
with some of these brokers out
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there.
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I have one more thing that we're
starting to do next year, well,
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a few weeks, it's TBD addresses,
right? So usually, when you send
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a deal completely into
underwriting, you already have a
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contract and you know, you're
wanting to move forward. If we
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have a complex scenario, say a
business owner, somebody that
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has a couple different tax
returns, whatever it is, we can
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actually submit and do a hard
underwrite on that client,
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before you even get to the point
where you have a ratified
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contract on a deal. So being
able to do that knowing that
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you're walking in and feeling
really good, is I mean, like you
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said, getting the deal done.
That's, you know, you don't make
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any money on a deal. You don't
get done right. So
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you don't or you know, if you're
the buyer, right, you don't you
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miss you miss out on the home.
So I think this is an extremely
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important topic, and
correspondent lenders that can
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get the underwriting done and
control that control the funding
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just give you or your clients
such an advantage when buying
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home, you know, maybe maybe on
like a refi or I owned and maybe
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maybe that's where I would take
the risk of the deal falling
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through to potentially save an
eighth of a point but you know,
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it's a purchase. When you're,
you definitely got to get it
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closed. I think it's definitely
worth it to go for a
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correspondence. If you're
listening. You've got clients if
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you're an agent or if you're a
buyer, or you're looking for a
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home loan, hook up with us and
go to hyperfast mortgage.com and
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learn what him in the USA
mortgage team can do for you.
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We'll see you next time.
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Thank you for tuning in to this
episode of hyper fat show.
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