When you go to McDonald’s and order a hamburger, you know exactly what you’re going to get. All McDonald’s burgers have a certain sameness, no matter if you order the single, the double, or the one with cheese. McDonald’s has one beef burger with certain variations. If you want more gourmet choices, you need to go to a more upscale restaurant. Which usually costs more.
True enough, but what if you could get that better burger at the same price as McDonald’s? Would you choose to go there instead?
When you walk into a bank or credit union, it’s a lot like walking into McDonald’s: they have their own loan products to offer and nothing more.
It’s “one flavor fits all.”
If you don’t fit into their mold, you’re out of luck.
On the other hand, if you choose to do business with a full service mortgage company or a mortgage broker, that loan officer has a whole smorgasbord of loan products to offer. This is because he or she can shop a variety of wholesale mortgage lenders to find the best (and least expensive) one to fit your situation.
Do You Know About Wholesale Lenders?
Many people don’t know there are wholesale lenders. When you walk into your local bank, that is retail. Did you know that your bank might also have a wholesale division? Those offices are often located in a high rise building or tucked inside a sprawling business park.
They don’t advertise on radio or TV, and they do business with the public. You have to be a broker representing a client to get a loan from them.
They may have different or more generous underwriting guidelines. Sometimes they offer better interest rates, too.
Having a “Plan B” Option is Better!
Not long ago, a home owner came to me asking for an FHA Streamline Refinance. I sent the loan application through our own in-house lending, but unfortunately, it didn’t work out. If I’d been working at a bank, that would have been the end of the story for the home owner. But because I can also shop wholesale lenders and broker out loans, I was able to find the perfect match. The home owner is lowering her interest rate by a full 1% and saving a significant chunk of money as a result.
The Best Mortgage Lenders
Call me biased if you like, but I favor having more loan choices.
Sure, the job is easier when you’ve got only one menu to choose from, one set of loan products. But that’s not always best for the consumer.
When I first started working in the mortgage business in 1999, I worked for a direct lender that had only one set of loan products. It was a good way to learn the basics and get started. But after a year and a half, I had to move on and up. I needed to be able to offer more choices in order to serve more people. Now I work at Cherry Creek Mortgage Company, a full service mortgage lender. I like having more choices to offer.
Thank you for stopping by my blog. I appreciate each and every reader.
Just in case you’d like to know, I am state licensed in California and Washington. (NMLS License 1284134) You can learn more about me here. There’s a “Meet Carolyn Warren” section at the bottom of that page.
Thanks Carolyn—I read every one of your columns! The information is so valuable—I always pass it along!
Is my Mortgage Experience Typical:
I just got a “Pre-Approved” (NOT Pre-qualified) mortgage from SunTrust bank here that we have dealt with for many years, and thru which we have had many mortgages because they KEEP their portfolios. Unfortunately their “mortgage division” is not related to their “Banking division”. One is in California and one is in Florida, but my loan officer is here in Maryland.
Talk about a comedy of errors! Neither Division talks to the other! When one division wanted to know why their OWN bank did a credit check on us, they sent me a request to answer—but it was in “banking code”—so I had no idea what they were even asking!
The Division that actually ASKED for the credit check denied knowing what it was about. This woman’s NAME was on the request! After 3 days the loan officer finally sent me a copy of the request and said THIS is what the OTHER DIVISION is talking about.
Why did it take him 3 days? He was copied on every email asking what the question even was.
The loan officer also told me the more OPEN credit lines you have the BETTER it is! I argued with him, saying all that means is that you have the ability to rack up that many more bills! I explained having a few is excellent—having 25 open lines with a credit limit of $100,000, is NOT so good.
We got the Pre-approved Mortgage for more than we wanted (we have excellent credit), but the Division in California made it only good for 7 days! If you are house-hunting—it takes longer than 1 week! WHAT were they thinking!? TODAY, I have to bug them again to extend the pre-approval to 90 days.
This same Loan officer gave me a document when I first asked about a mortgage. The document explained getting a Pre-approved Mortgage. Then he tried to talk me OUT of getting one, because he’s have to check our salaries AGAIN! Poor thing—that’s his job!
Just letting you know—no matter how many times you try to cover all your bases—there are dumber than dishtowel people out there to put a fly in your ointment!
Thanks for your blogs! Lin
You might find it interesting to know that loan officers at banks are not required to get a mortgage loan originator license that involves completing 20 hours of training plus state-specific training, passing a 125 question test, going through a background check, including fingerprinting. Loan officers at full service mortgage companies and brokers must get licensed, which means going through all those steps. So no, the incompetence does not surprise me.
In my opinion, many banks are great at managing checking and savings accounts but horrid at doing mortgage loans.
I am licensed in California and happy to help folks in CA!