Bank or Broker for Your Mortgage?
By admin ~ December 1st, 2008. Filed under: Mortgage FAQ.
This is a common question. People want to know why mortgage brokers have an advantage over banks when it comes to interest rates (and hopefully fees).
You need to read the YSP (Yield Spread) post to understand this unless you already know what it is.
CHECK IT OUT!
A certain retail bank that starts with “W” (and it hasn’t been in turmoil like some of the other “W” ones) was offering 5.25% on a 30 year fixed mortgage. They were charging a 1% origination fee.
The same 30 year fixed rate could be obtained at the same time through a brokerage using a particular lender at 5.0% and 1 point origination or 5.25% and NO orgination.
That means the broker would save the borrower either a whole percentage point in fees or a quarter in the interest rate.
The bank loan was equivalent to a 2.375% commission to a mortgage broker. A fair mortgage broker will glady lower the interest rates and fees to beat the bank ALL DAY LONG.
Keep this in mind folks. Find the right mortgage broker or mortgage bank and get better loans. It’s that simple. If none of this makes sense check out the mortgage resources section.