Loan Brokers: Cheaper, Faster – Better Buyer Experiences
R.E. pros benefit from partnering with independent loan brokers thanks to fast turnaround, flexibility, and dedication to borrower experiences.
Inman: 55 Reasons Tech Can’t / Won’t Replace Agents
Zillow: Why Most Buyers Rely on Agents for Loan Info
Unfortunately, some agents hesitate to reach out to mortgage brokers based on myths and misunderstandings that only serve to rob them and their buyers of the advantages of such a partnership.
I’ve rounded up and debunked three of these myths.
Myth 1: Broker vs Mortgage Bankers vs Depositories,
Credit unions and Banks.
“Lie Small to You Small – Lie to You Big”
Many large mortgage companies “tout themselves” as mortgage bankers. At the end of the commercial, they said, “It’s our money, and we decide.
”That’s not true!
It’s just an advertising gimmick designed to trick buyers and agents into using it. Few companies “warehouse” their own loan portfolios—their profits are in the selling (originating), not the holding.
Mortgage brokers have more flexibility and control than direct retail and institutional lenders, as loan brokers can choose from a range of wholesalers that are an exact match.
Virtually every loan (90%) is sold to Fannie/Freddie/FHA or VA lending sources. Period.
Wrong: Fannie sets the rules, that is why they offer a DU system to give a (relatively) instant answer after the client has submitted their entire paperwork
For Example, FHA and VA have NO floor for lending scores.
Most VA and FHA institutional lenders have a minimum of 640 – 660 (middle) FICO scores. Yet, with 10% down, my wholesalers will go down to a mid-score Fico of 580 VA or an FHA loan.
Most Brokers Have a DTI (debt to income) of 49 -55%.
Because of their role in the “great recession,” Institutional lenders and so-called – direct lenders are limited to between 41- 43% (back-end DTI).
All institutional lenders have “overlays,” meaning they have additional restrictions to Fannie .VA, FHA guidelines.
Mortgage brokers control their process and pipeline more than their retail counterparts.
Take loan options, for example.
While retail lenders are paid to push their own limited suite of products, independent mortgage brokers are free to shop multiple lenders to find the perfect loan option for your buyer — one that works best for them and their finances.
These loan options come with lower wholesale rates, so your buyer will likely receive a lower monthly payment.
Mortgage brokers are also in charge of their own schedules, which means more availability and accessibility to you and your buyers.
Instead of sticking to “banker’s hours” like traditional lenders, independent mortgage brokers can meet, speak, or respond to texts whenever you need them and when it’s most convenient.
Myth 2: It’s easier to work with a
big national lender than with a local mortgage broker
Agents: Like you, mortgage brokers are local entrepreneurs who build long-lasting relationships.
The success of their business relies on providing you and your buyers with an easy, smooth, and worry-free experience.
And while big banks and online direct lenders often treat buyers as faceless transactions, independent mortgage brokers work closely with you and your buyer to deliver elite personal service long after the loan closes.
More “BS and Blue Sky”
No lender closes loans in 15 days, as inspections often take longer than that. Then there is holidays, weekends, and other events that are out of everyone’s control.
Independent mortgage brokers can close most loans in less than 30 days or less by working with multiple wholesalers’ competing to deliver great service.
Compare that to the industry average of about 41 days.
Note: Late closings are usually due to a buyer’s indecision, a seller’s unavailability, or lack of preparation by many parties involved in the transaction’s
Myth 3: Mortgage brokers are low-tech
No, we are not. Many larger real estate brokerages perpetuate this myth to denigrate their competition without having to say anything directly negative.
If you’ve been reading my blogs for longer than a few weeks or visited danieldobbs.org, you’ll notice that both of my platforms are easy to learn and offer a professional product with lightning-quick speed.
Mortgage brokers may be independent, but they aren’t alone.
The wholesale lenders that compete for their business provide cutting-edge technology often far beyond what retail lenders can offer.
Remember, a mortgage broker’s success depends on their ability to give your buyers, both the listing and selling agents, a great experience, so they’re motivated to deliver tech that makes the loan process as simple and painless as possible.
Every transaction is a lifetime of repeat business and referrals for both their agent and independent lender.
Large mortgage companies are only interested in their stock price and management teams! Good luck with that!
