''And the borrower always knows he can come in if there`s a question or a problem. ''Not all banks service the loans, but we do,'' says Schroll. Schroll of Glenview State Bank points out that if you go to a banker who will also service the loan, or take in the monthly payments, you have ready access to someone who can answer any questions. Otherwise, borrowers may send their monthly mortgage payment to a distant lender and use an 800 number to communicate. If the mortgage is funded by a local lender, borrowers may be able to go to that institution with questions, provided the lender keeps the servicing. Once a borrower secures his mortgage through a broker, the contact between the two is over. With the supermarket of mortgage choices a broker offers, is there any advantage in going to your local banker directly? The broker did have a lot of options, though.'' ''I knew exactly what I was looking for as far as rate and term. ''Actually, I got about the same deal I would have at a local bank or savings and loan,'' he says. Naperville resident Frank Sherman recently used a broker, but has neutral feelings about the process.
''It`s nice to get a picture of the world, to know where the marketplace stands,'' Gumbinger notes. Sitting down with a broker and reviewing a multitude of options does give you comfort in making your mortgage selection, though. A borrower should be able to find a competitive interest rate from lenders in his own county.'' ''Rates don`t really vary that much from one region of the country to another.
''Not really,'' says Gumbinger, whose firm collects data weekly on mortgage interest rates around the country. Does that mean that borrowers have access to better rates? By the same token, a mortgage broker should look for a lender with the mortgage option that the borrower prefers.''Ī mortgage broker may represent some banks and lenders that are right in this vicinity, as well as lenders from all over the country. You wouldn`t go to an Italian restaurant and order a hamburger, and you wouldn`t order spaghetti at a hamburger place. ''Some lenders specialize in five-year adjustables, for instance,''Ĭontinues Gumbinger, ''while another might make 20-year, fixed-rate loans. ''A broker knows which lender specializes in which type of loan,'' says Gumbinger. A borrower`s basic choice is between a fixed-rate and an adjustable-rate loan, but there are many variations, depending on the term of the loan or adjustment periods. Banks and other lending entities also charge borrowers points when they originate the loan directly.īy dealing with multiple lending sources, brokers can also offer borrowers a broad menu of loan choices. Mortgage brokers typically make their money by receiving all or a portion of the upfront loan fee, or points (one point is 1 percent of the loan amount) from the lender.
Getting a loan through a broker shouldn`t cost you any more than going to the lender directly, says Patricia Cunningham, director of consumer affairs for the Office of the Commissioner of Savings and Residential Finance, the state office that regulates brokers.
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