Recently, I was asked by a potential new client to explain the advantages of using a mortgage broker versus a bank. This is a great question! Last Week I shared the first two reasons, here are the last three additional advantages:
3) Access to lenders without “overlays”. The lending environment became more conservative after the real estate downturn. In the panic that followed, most lenders added “overlays” to the standard guidelines (Fannie/Freddie, FHA/VA) in order to further protect themselves. In other words, they added extra criteria over and above the minimums required in order to further reduce the risk of default. Most lenders have been slow to remove these “overlays” as the market has improved. As a broker, I have access to lenders that don’t have ANY overlays over the basic guidelines, therefore increasing the ability to provide financing in a variety of situations. These overlays can consist of all manner of things, from credit scores, to debt/income restrictions, number of properties owned, etc., etc. To provide a basic example, most lenders require a 640 credit score on FHA/VA loans. We have lenders that go down to a 580 score on these.
4) Broker handles process from start to finish. The process at most banks is that the loan officer takes the application, and then turns it into the processing department at the bank and there is little involvement from the loan officer from there. I handle the processing from start to finish on all my transactions. I manage it through the process from start to finish, and am therefore more in control of status, timelines, etc.
5) The lender pays our fee! There is often a misconception that a broker is a “middleman” with additional fees. This is simply not the case. In 99% of our transactions, the lender pays our compensation. We work with the wholesale departments of our lenders, consistently delivering our products at very competitive pricing that’s typically lower than that available from the retail banks.