I didn't really explain the difference between a mortgage banker and a mortgage broker all that well. First let me say that an experienced and talented mortgage broker is an excellent resource and worth their weight in gold. They are increasingly difficult to find now, for every good one, there are 100 that don't know what they are doing. (Kind of like Realtors...easy to get the license, but not easy to know the business!)
A mortgage banker has access to many, many lenders too. What a mortgage banker does is actually originate and fund the loan. They may use their own funds or borrow funds from a warehouse lender to fund the loan. Then, usually at the closing table or shortly thereafter, they sell the loan so you actually end up with someone like Chase or Wells Fargo for example. The mortgage banker underwrites the loan, funds the loan and then sells the loan (and/or servicing rights) to one of many, many lenders with which they work. When a mortgage banker gives you an approval, you have an actual commitment and you know the loan will be funded, unless you do something to change your financial status before closing.
A mortgage broker brings borrowers and lenders together, but does not fund the loan. They don't have an underwriter to reference at all. They get criteria from many lenders, but it is not the same as actually underwriting the deal. As a consequence, a mortgage broker can issue a "pre-approval" that really doesn't mean anything because the underwriter is with a lender they many not even have submitted your information to yet. A good broker will know what works and will have you meet that criteria in advance. However, for every good broker there are 100 out there that will promise anything to get you to use them and then never perform. Those types of brokers operate under the theory of throwing everything against the wall and see what sticks. You don't want to go down that road without an experienced & talented mortgage broker because you are the one that takes the hit if he/she didn't prepare the file right from the beginning.
Just to give you a little perspective on your loans - one of my buyers closed today. She is a first time homebuyer. Her loan was an FHA loan with the 3.5% down payment which is an LTV of 96.5%. The rate is 3.875% fixed, 30 yrs. The origination fee was half a point. But she has MIP. Everything is a tradeoff.
@StartingOver10 wrote:I didn't really explain the difference between a mortgage banker and a mortgage broker all that well. First let me say that an experienced and talented mortgage broker is an excellent resource and worth their weight in gold. They are increasingly difficult to find now, for every good one, there are 100 that don't know what they are doing. (Kind of like Realtors...easy to get the license, but not easy to know the business!)
A mortgage banker has access to many, many lenders too. What a mortgage banker does is actually originate and fund the loan. They may use their own funds or borrow funds from a warehouse lender to fund the loan. Then, usually at the closing table or shortly thereafter, they sell the loan so you actually end up with someone like Chase or Wells Fargo for example. The mortgage banker underwrites the loan, funds the loan and then sells the loan (and/or servicing rights) to one of many, many lenders with which they work. When a mortgage banker gives you an approval, you have an actual commitment and you know the loan will be funded, unless you do something to change your financial status before closing.
A mortgage broker brings borrowers and lenders together, but does not fund the loan. They don't have an underwriter to reference at all. They get criteria from many lenders, but it is not the same as actually underwriting the deal. As a consequence, a mortgage broker can issue a "pre-approval" that really doesn't mean anything because the underwriter is with a lender they many not even have submitted your information to yet. A good broker will know what works and will have you meet that criteria in advance. However, for every good broker there are 100 out there that will promise anything to get you to use them and then never perform. Those types of brokers operate under the theory of throwing everything against the wall and see what sticks. You don't want to go down that road because you are the one that takes the hit if he/she didn't prepare the file right from the beginning.
Just to give you a little perspective on your loans - one of my buyers closed today. She is a first time homebuyer. Her loan was an FHA loan with the 3.5% down payment which is an LTV of 96.5%. The rate is 3.875% fixed, 30 yrs. The origination fee was half a point. But she has MIP. Everything is a tradeoff.
+1 on the Mortgage Broker!!! It is true that there are fewer really good mortgage brokers out there and the same goes for realtors. Just make sure you check the license status of the broker before you pick one. You will save money and time by connecting with the right broker. I spent over 30 years as a mortgage banker and broker. Good Luck!