March 18th, 2019 1:11 PM by Gregg Mower
When shopping for a home loan even your Realtor may not know the differences between a Broker and Banker, so even if they recommend a Loan Officer to you, because they have used them in the past, you should do your research as you might be able to save yourself thousands of dollars. Your Agent may think a direct lender is a better deal for you as they underwrite their own loans “in house”, but the fact is it might be in the Realtor’s best interests not yours. “In House Underwriting” sounds sexy, however, in today’s automated world every Loan Officer be it from a Banker/Direct lender or a Mortgage Broker has the same automated underwriting systems available to every underwriter. So when you apply for a loan with either a Big Banker or a Small independent Mortgage Broker they all have the same access to an underwriter or underwriting systems. So the myth of having your own underwriter as a selling point is just that a myth and what happens when their underwriters have a bad day, you pay the price. A Mortgage Broker can deliver your loan file to several different underwriters that will have different rules and guidelines to get your loan approved. Technology has improved so much that all of the paperwork necessary to process a loan can be uploaded and transmitted to an underwriter instantly and that underwriter can make a decision quickly and if a Banker’s Underwriter declines your file you are done with them. If a Mortgage Broker submits your file to an underwriter and they decline it a Broker can take your file to another underwriter without you having to gather all your information again and again. Most underwriters today use either the Federal National Mortgage Association’s or the Federal Home Loan Mortgage Corporation (Fannie Mae or Freddie Mac) automated underwriting systems to underwrite traditional home loans and those same systems are available to all Loan Officers either from a Large Banker/Direct Lender or a Small Mortgage Broker.
You may say that all of that is good but all I care about is getting the lowest monthly payment and the lowest costs. Although both a Banker and a Broker inevitably get their interest rates from the same sources it is how much that is charged by the company that makes the difference in interest rates and fees that are quoted to you from lender to lender. We have already discussed earlier that Bankers have bigger and shinier offices than that of Brokers and with that comes a larger overhead and more expenses than that of a smaller Mortgage Broker. That all has to be paid for and they do that in the form of higher interest rate and fees. The smaller firms like MAE Capital Real Estate and Loan can keep that overhead low thus being able to offer a lower interest rate and lower fees and can save you thousands of dollars upfront and monthly.
In addition, the regulator in California for Bankers is the Department of Business Oversight (DBO) and they have different laws then that of the Department of Real Estate (DRE) who regulate Mortgage Brokers. We talked earlier about Bankers having a larger overhead and expenses than that of a Mortgage Broker and thus the need to make more profit per loan closed for the company than that of a Mortgage Broker but what exactly does that mean? The Direct lender has to pay more staff, more rent, more insurances making their costs much higher than that of a Mortgage Broker and their Regulator, the DBO, knows this so the Banker has no limit on the amount they can add to the interest rates and fees to maintain their profitability . A Mortgage Broker, on the other hand, is limited to a maximum of 3% of the loan amount they can make on any one loan from the DRE. A Direct lender does not have that limitation and they can charge what they want to be profitable costing you money. The Mortgage Broker has to keep their overhead as low as possible being limited by law on how much they can charge is your benefit with lower interest rates and fees.
Having been on both sides of the fence I understand completely how this process works and will tell you that you will save thousands by working with a company like MAE Capital Real Estate and Loan. Every Loan we close is a testimony to this as the client’s rates and fees are significantly lower than that of a Banker on every loan transaction. As a Mortgage Broker we can also offer other loan products that a Banker can’t such as Private Money Loans for investors, Certain Bank Statement only loans to qualify borrowers that can’t show enough income to qualify traditionally. Overall we as a small Mortgage Broker can find the best loan for your needs with he lowest interest rates and fees. An example of this is; MAE Capital closed a VA loan that came to us from a Veteran who works for the VA and he received a quote from one of the Veteran’s Administration’s “Approved Lenders” that is a Banker/Direct Lender and we beat them by .5 in interest Rate and $13,000 fees. We closed the loan a 3.875% and the veteran paid $0 down and $0 closing costs, saving him $13,000 in costs and has a lower monthly payment. We have many stories like this and most of our clients don’t even realize the savings they are receiving as most clients don’t shop for a loan. So if your Agent is recommending a Loan Officer Check the rates and fees and then check with MAE Capital Real estate and Loan and you will be shocked at what you will save. If you are buying in the Greater Sacramento Area (El Dorado, Placer and Sacramento Counties) ask about our Bundling of Services where we represent you as the Realtor and the Loan. This has saved our clients even more money as we can bundle our commissions and get you a home warranty and even lower interest rates and fees. MAE Capital Real Estate and Loan is one of California’s best kept secrets when it comes to saving people money on their home financing. Trying to change this secret into mainstream facts by educating our clients and future clients. Call us today to find out more or have us compare your Direct Lender’s Loan Estimate with ours and see how we can save you thousands of dollars. We can Lend all up and down the State of California. Our phone number 916-672-6130 or go directly to our site at www.maecapital.com.