Mortgage Broker vs Credit Union

[Manco Snead]

Greetings all,

Newer investor here (own one duplex with good equity) moving toward buying a second multi-family, likely via 5% loan, cash-out refi, or HELOC. Trying to understand a few concepts here:

1. My current duplex is financed through my credit union and I've always been happy with them. For a new loan to finance an additional multifamily what are your thoughts on credit unions vs mortgage brokers? I've only ever used my credit union and like the idea of continuity and sticking with something that works, but I understand many people like working with mortgage brokers. 

2. Perhaps the obvious is escaping me on this question: If I choose to refinance or do a HELOC on my currently owed duplex I would be able to do that only through my credit union through whom I have the loan, correct? I could not do a refi or HELOC through someone else, i.e. mortgage broker, other bank etc, correct?

Much thanks.

[Chris Mason]

Originally posted by @Account Closed:

Originally posted by @Manco Snead:

Greetings all,

Newer investor here (own one duplex with good equity) moving toward buying a second multi-family, likely via 5% loan, cash-out refi, or HELOC. Trying to understand a few concepts here:

1. My current duplex is financed through my credit union and I've always been happy with them. For a new loan to finance an additional multifamily what are your thoughts on credit unions vs mortgage brokers? I've only ever used my credit union and like the idea of continuity and sticking with something that works, but I understand many people like working with mortgage brokers. 

2. Perhaps the obvious is escaping me on this question: If I choose to refinance or do a HELOC on my currently owed duplex I would be able to do that only through my credit union through whom I have the loan, correct? I could not do a refi or HELOC through someone else, i.e. mortgage broker, other bank etc, correct?

Much thanks.

 If your credit union is treating you well (and most do) there isn't a reason to pay the fee of a mortgage broker. If the CU can'y do the type of loan you are looking for then you use a mortgage broker. When I was a loan officer for a mortgage broker we had access to over 400 sources for loans but still rarely beat a CU if we wanted to get paid for out work. Banks are typically in last place.

 Things have changed a bit since back in the day. Independent mortgage brokers are almost always set up on lender paid comp, and the rate/fee combo (assuming any fees are charged at all) you get with ABC Lender through a broker is typically better than what you get if you call ABC Lender directly. At least once a week a client tries to 'cut out the middle man' (ie, me) and call XYZ Home Loans directly once they find out I'm brokering it there, and then they call me back asking how it's the case that they get a better deal with me than by calling them directly. There's a reason wholesale is the fastest growing mortgage distribution channel. :)

Another difference is that in 2019 fewer Realtors and consumers know how to tell a mortgage broker from a banker than in 2007. I know b/c I was a banker for many years, and Realtors would introduce me via e-mail with "hey Sally this is my favorite mortgage broker Chris, he's also a direct lender." Think about that one for a moment. :P

In any case, OP: CUs and independent mortgage brokers will be pretty neck and neck on rate/fee combo for a given situation. I don't steal a lot of business from credit unions over rate, nor do I lose anything to them, it's almost always a matter of speed, service, who the client feels will take better care of them, not really a compelling rate/fee difference either way. A broker will have more flexibility and less overlays at play, but a CU will not have to ask you for your various account statements since they already have them, and for whatever reason CUs are all about ARMs (if you want one...). Really not necessarily a huge deal either way, if a bottle of coke is $1.25 v $1.20 just get it where you like - if my bottle of coke is $1.20 but your personality jives better with the CU who is offering $1.25, most people will go with the $1.25 + the person they like better. The difference would be much larger if the question was about a big box retail direct lender like Guaranteed (to be high) Rate or something like that ($2.25 v $1.25 - if my bottle of coke is $1.25 in that scenario, you would probably work with me even if you don't like me). If you think your CU isn't taking care of you, call an independent mortgage broker. If you think your independent mortgage broker isn't taking care of you, and you feel a few overlays will not sink you, then sure call a CU.