Broker or lendor loan ?

[Menno Swartzentruber]

As a first time home buyer should I get a loan from a lendor or a broker ? Any pros cons I should know .

[David M.]

@Menno Swartzentruber

He is one discussion thread that might be of interest to you:

https://www.biggerpockets.com/...

I'd say talk to a mortgage lender.  Realize that after the 07-08 crash, loan originations by deposit banks (e.g. Chase, Wells Fargo, etc.) are down ~66%, ie. they are only doing a third of the business they used to.  I'm told it has something to do with the Dodd-Frank Act which somehow puts more regulations on the deposit bank lenders than non-deposit lenders.  The exception might be if you have stellar credit and solid W2 salary income, in which case they might be able to give you a slightly better rate.  However, just realize you will be just another "number" in their production process of issuing loans.

In my view, residential mortgage lenders (non banks) are a dime a dozen.  You just need to find or be referred to a good loan officer..

As for mortgage brokers, I don't prefer them, but there is a trade-off.  A broker did post recently whic covered it well, but I can't find it.  Let me try to summarize.  Basically, since the broker is searching the "whole market," you should be getting the best deal that way which should/would justify the additional cost to pay the broker.  Certainly, if your financial situation is more "complicated," than a broker might be advantageous as they could find the lender that would suit you.  Otherwise, if you have time to call around and find your own lender, then I would think the broker's services wouldn't be required.

In my opinion, rates don't change that much since they are all reselling to the same secondary market.  Some lenders may run "specials" or be able to lock in a much better rate but usually those are special considitions, like a 15 day rate lock..  In my opinion, service is the big issue.  Lets face it, buying a property is stressful, and the loan process is its own "ball of stress."  So, I'm looking to limit the amount of stress.  I know others, however, who prioritize that extra 1/8% point and will take on any stress since they know its just for that few weeks..

Hope that helps.  Good luck.