As a Mortgage Banker and Broker at Texas Lending, I have an unbiased opinion of each type of entity. From the standpoint of a consumer the differences in the two can be hard to detect.
Each entity has strengths and weaknesses. It is beneficial to remember that all mortgage entities are middle men. They must sell loans to the market to free up cash in order to make more loans. I know of bankers that overcharge consumers with a smile on their face and I know brokers that offer a great deal.
There are national lenders that are publicly traded companies making thousands of shareholders rich at your expense and there are local private firms that can beat national lenders hands down due to better efficiencies and lower overhead.
From my experience certain loans are best handled as a banker while others are best brokered. What you need is an experienced consultant you can trust who will share realistic expectations. Before making any decisions, it is best to weigh a few different options. Shop around a bit and speak with a mortgage consultant who can really identify with your unique situation.
Now you may be wondering how to shop mortgage companies for the best closing costs.
The fact is that closing costs are whatever you want them to be. If you want $3,000 in total closing costs then tell all companies that you want a rate quote with only $3,000 in costs. Count taxes, insurance and daily interest separate from closing costs. Tell the mortgage companies that you will ask them to sign an affidavit holding them to the closing costs quoted.
You will now be able to see who has the best rate with the costs you choose. Rates should only be shopped on the same day within a 2 hour window because the mortgage market sees rate changes in real time similar to the stock market. If you receive a rate quote on Monday from company A and a quote on Wednesday from company B be sure to call back company A to get a rate update. In a falling rate environment the good quote on Monday may seem like a bad quote on Wednesday. In a rising rate environment the Wednesday quote will look worse than Monday and you’ll kick yourself for getting greedy and not locking the loan sooner.
Kevin Miller is CEO of Texas Lending, the Consumer’s Choice Award Winner for Mortgage Lenders in Dallas/ Fort Worth for 2007 and 2008.