Bank or Mortgage Broker? Who to Use?

October 5, 2009 · Kathy Wall

Where is the best place to get your home loan….a bank or a mortgage broker? Over the course of my many years in real estate, I have waffled back and forth over this question. Many times my decision on whom to refer would be based on the credit of my buyers. If they were self employed, had a small down payment or not-so-good credit, I would usually suggest that they talk to a mortgage broker. If they had excellent credit scores and a good down payment, I would usually suggest that they might be better off going directly to one of the major banks.

Now, after an incredibly negative experience with one of the largest banks operating here in California, I am leaning much more towards referring all clients to mortgage brokers, because I know that they will do the job and, most importantly, will actually care about my clients.

In this instance, my client has very good credit and good income, but is a commissioned employee, so I referred her to an excellent mortgage broker that I often use. Unfortunately, my mortgage broker said that, due to the way her salary/commission had been paid over the last few years, she wouldn’t be able to qualify on her own and would have to have a co-signer.

Since she really wanted to try qualifying on her own, my client then spoke to a representative of the aforementioned large bank, who assured her that everything would be fine, so she decided to go with them. I realize now that we should definitely have used my mortgage broker! Just a few of the ways in which this large bank mishandled this transaction were:

After 40+ days of having the loan package (when we were supposed to close in 30 days), they came back and said that they couldn’t use the commission portion of my client’s salary (just like my mortgage broker had originally said.) Fortunately, my client was able to add a family member, so we could keep the loan going. However, had they let us know at day 10, rather than day 40, we wouldn’t have been in the incredibly scary position that we ended up in, with my client possibly losing the house, as well as her entire deposit.

Then, 2-1/2 months into the transaction (unheard of!!!) and just a few days before we were finally supposed to close escrow, the bank called and said that they had done a review of the appraisal and that the seller would either have to lower the price or the buyer would need to come up with another $3,000!

Worst of all, with the exception of one of the bank’s loan processors, they treated my client like she was just a number, paying absolutely no attention to any of the deadlines and forcing us to get extension after extension from the very patient listing agent. On the date of the signing, which was being done at the bank because the title company was several counties away, they had my clients come in at 3:30 when they hadn’t even printed out the documents, forcing them to wait for almost 2 hours to sign and, then, because they had missed some documents, forced them to come back the next day to sign more.

It was crazy, but really reinforced my belief that, as agents, it is incredibly important to have a strong working relationship with whomever does your loans…to know that the lender doing the loan has a proven track record and will truly care about your clients.

You can reach Kathy Wall @ (415) 608-4168 or her website www.michaelandkathy.com

Share and Enjoy:

If you enjoyed this post, subscribe to the Author's RSS feed or the Blog's RSS Feed!

Filed Under F A Q, Important Thoughts, Real Estate Finance, Real Estate for Buyers and Sellers

Tags: California, commission, down payment, home loan, Kathy Wall, mortgage, mortgage brokers, real estate, title company

Print |

Share and Enjoy:

Comments

4 Responses to “Bank or Mortgage Broker? Who to Use?”

admin on October 5th, 2009 9:49 am

Kathy,

Thanks for your observations.

When a particular bank is heavily promoting a particular product they can be very competitive.

Many times an excellent mortgage broker can find the correct product for your buyer that is a better overall value.

Thanks again,

Brian
Dean Rizzi on October 5th, 2009 12:59 pm

Kathy,

Thanks for the story. I always tell my clients who come referred by realtors that it’s in my best interest to make sure they are well taken care of because that’s how i get more referrals from that realtor. It’s so important that they feel we gave 110%. It’s simple business.

Dean Rizzi
Adam Chinn on October 5th, 2009 3:32 pm

Kathy,
I have also experienced difficulties with a large bank. I had clients who were purchasing a home and they were friends with a loan officer, so they naturally wanted to give them business. When possible I prefer to work with people who are referred or recommended to me, but as long as my client is happy then it was ok with me.

Little did I know how long and complicated getting the loan for my clients would be. In my opinion, much of it was due to the actual loan officer not always being on top of things. I know everyone is busy and my clients were buying property on the more affordable side, so perhaps they did not get all the attention they deserved in getting the loan through.

Although I had a bad experience with that particular bank I have believed that many of the issues could have been solved by the loan officer and I did not think it was due to the company itself, but I could be wrong. I’m sure every company has some employees that are great and some that could do their job a little bit better.

Most importantly, my clients eventually got their loan, house and they are happy. I try to give people and companies the benefit of the doubt, but sometimes it isn’t easy. The people you work with shape how and what will happen to you. It sounds like your clients were happy in the end and I would not expect anything less with you representing them. Thanks for sharing your experience. Keep up the great work!

Adam
Larry Franzella on October 9th, 2009 10:04 am

A good mortgage broker can really be beneficial to the transaction.

Larry