Quote from @Carlos Ptriawan:
Quote from @Jim Duncan:
Hi Andrew,
Lots of good advice in this thread, and most of it is spot on.
I would suggest one of your primary concerns should be how well your communication with the person goes... do they seem to be upfront and realistic about what they can offer, as well as get specific answers back to you quickly, or do you feel like they aren't connecting with your concerns, and/or are not confident in what they can offer?
Because of the complexity and length of time progressing a mortgage from application to funding, it's essentially like you are in a short-term partnership with whomever your loan officer is, so the ability to communicate well with you is of great importance. Picking someone who is easy to communicate with and knows their stuff will save you many potential headaches if challenges arise during the deal.
Additionally, in answer to the earlier answer someone gave you who said "don't believe someone who says they have over 200 lenders," well, as someone who has around 200 lending partners they work with, I'd have to say this is a bit silly :). It absolutely is an advantage the more ability you have to shop your deal efficiently and without cost through as many potential lenders as possible. Different lenders offer terms all across the country for different types of deals they prefer... that's the free market. And I can't speak to anyone else's process, but I often spend hours checking through our wholesale lender network to truly find the most competitive terms for each client, rather than just sending deals to the same one or two again and again. I'm not even sure why a loan officer would do that and potentially lose a deal to better terms elsewhere, unless they were just lazy?
That said, I wouldn't even just speak with one well-connected broker or correspondent lender at first, but suggest it is to your benefit to check with at least three or four people when shopping for a mortgage partner. There is no harm, as long as they are not trying to force you to put in a full application and pull credit, before giving you at least a rough idea of what they can do. See what terms they offer (and definitely make sure to ask about points and/or fees for the rate they say they can give), and then also weigh in your ability to communicate and how knowledgeable the person seems about the necessary steps to get the deal done for you.
The reality is that most mortgages do have challenges that arise during the process, so you really want to be selecting the combination of best offered terms, and the confidence you have in the individual to get the deal done on time.
Hi Jim, I understand the importance of mortgage broker in CRE activity; but in residential, it's way more straightforward, we have to connect to at least 10-20 different lenders, but my question would be, what broker A and broker B can do for residential, when the lender availability is in the front of our eyes, anyway ?
Hi Carlos,
If I'm understanding your question correctly, I'd say you are correct, IF you are only talking about A-paper, Conforming, excellent qualification borrowers and loans on primary residences. If you are talking about a person who has plenty of excess, and documentable income with a mid-700 credit score or higher, and plenty of liquid reserves in the bank, purchasing a well-valued property as your primary residence, then absolutely, it all becomes kind of cookie-cutter at that point! And I'd suggest you don't call a broker but go to Wells Fargo first. :)
Since this is a real-estate "investment" forum though, and I prefer to work more with investors and people who don't fit into that perfect-financing box, I sort of always assume that is the default scenario in these discussions.
In which case, if you are talking about real-estate investment mortgages (like DSCR, rehab, cash out scenarios, and/or renovation loans) the differences offered on loan terms between lenders around the country are VAST! And it actually requires quite a bit of time to keep up to date on current knowledge as to who has the qualifying guidelines shifted in different ways in order to efficiently match up the best program for each borrower's unique scenario.
As in, (and this is just a random example to try to illustrate the point) if you are someone who can provide bank statements, but not W-2s or tax returns, to prove you have a certain DTI needed to get you a 7.5% rate on an investment purchase (non-DSCR), I need to know which of our lending partners to put your through, as they are entirely different from the lender that will offer a 7% rate for a fully documented employment. Additionally, if it turns out the bank statements you thought you could provide don't actually even show the income you expected once we dive into the expense numbers, then I need to know which one of our many DSCR wholesale lenders you would still get a decent rate with not needing to document your income at all. And this is potentially while the property is already under contract, with a ticking clock on me securing your financing before your deal gets jeopardized.
And this is just one quick example based off of the variable of income, when in actuality, every underwriting variable from income, to credit, to personal assets, to the LTV of the loan amount, to the condition and type and location of the property itself, can all disqualify you from one lender, while will be acceptable to another. Also, each of those lenders offers different lending terms on that mix of underwriting variables (called a guideline matrix) to come up what rate and loan duration they will offer you, as well as whether they will allow things like interest only payments or require a pre-payment penalty.
I (and most decent brokers I know) probably spend upwards of ten hours a week on Zoom calls with our various lenders just having them explain to me what variables they like to lend on versus which they don't, and at what terms. Those terms are then typically updated daily based on the secondary resale market relationships they have on the back-end, sometimes improving, sometimes worsening, and sometimes those lending partners offering us special deals or exceptions based on the overall volume of business our company sends them, but something we need to be on top of to secure the best deals.
Last, 90% of these lending partners and terms I mention are through what are either "private" or "wholesale lenders," meaning they do not offer a retail, client-facing division of their business, but only allow brokers and correspondent lenders (like us) to originate loans for them. This means that even if you knew how to do the same work of finding them and staying up to date on all their guidelines and loan terms for any given time, if you called them and asked for a loan, they'd likely answer "sorry, but we don't do that, please call..." and give you the name of one of their mortgage broker partners.
I'm not sure if that exactly answers your question, but I appreciate you asking it, as I think there is a lot of misconception over what different entities in lending do, and how the process works.
Bottom line, if you very rich with great credit and just want to buy mansion to live in, you probably want to call Chase or Wells Fargo rather than me. Lol. As the less you actually need a loan, the more they will bend over backwards to earn you as a banking client and offer you a rate I probably can't beat.
If, however, you're anything else, or Wells Fargo rejects you because you forgot to make a credit card payment in 2020 or something, then give me a call! :) That's when knowing who does what and how to get the deal done with them, especially if you're under a time crunch, can be extremely valuable to a client.
