In the next couple of months I am looking at starting the home buiyng process, first time. I am not sure which is better, so your opinions would be very helpful. What are the pros and cons of both? Does one have more fees than other?
Mortgage Broker pros: Better chance of getting approved. The broker can fit your credit profile to the right lender at the right terms and rate. Saves time and expense. Be honest with the broker and he/she will advise you how to proceed without being flat out denied and turned loose to try again. Cons: None
I agree with most of namvet's comments, except that a broker might theoretically be more expensive (as a middle man, basically). But, like namvet indirectly said, they might pay for themselves by finding you a better loan than you could find on your own. The good ones should, at least. Find a good one
One pro of going to a lender direct would be if you have any kind of relationship with them; a credit union, for example.
I bank with Bank of America and have my auto loan through them. Do you think I should give them a shot directly?
I went directly to the bank. I'd heard good things about Wells FHA so I went directly with them. I was more than satisfied with the offer and took it. Some prefer brokers. There really isn't a wrong way to go, both are good options. I will say a broker would probably be the better choice if you have challenged credit as they can shop it around a lot easier.
Giving Bank of America a shot is something I've been wanting to do for years........
+1 I just can't stop laughing!
Both. Pros: best of both worlds. Cons: A little more of your time and a few more inquiries, which if timed correctly will only score as one inquiry.
Seriously, go to both. I applied with a broker, a few of the big banks, and a couple local banks. It was the local bank that had the best offer, but I know others who got the best offers through a broker. I don't know a lot about this, but I think that there's no one right answer. Sometimes one bank may have access to a different group of investors to shop the loan to and have a better offer, while other times other a different bank or the broker will have the best offer.
You don't have to fill out complete applications with them either. You can tell them your scores and show them your reports and ask them what they can offer you based on your current credit profile, with the understanding that they will have to pull your credit before anything is official.
I had no credit challenges and got a loan product that most do not know about by using a broker. That was 3% conventional, only select lenders offer the product so the chances that I would have found it on my own would have been slim to none.
And the convenience of only having to fill out 1 credit application and letting the broker then do all the work just really can't be beat. Otherwise you are going to be dealing with all the LO's yourself and their requests and keeping up with them while product shopping.
YMMV, but with "good" credit scores (770+) I've had the greatest success using direct lenders off the internet, refinancing 3 times in the last 18 months.
This can be a little scary in that whoever you choose, you can immediately find 100s of articles of the type "Run screaming away from XXXX", "XXXX is a total scam!!!!", "XXXX ripped me off, killed my family and had me abducted by killer space alien cannibals" (OK, last is made up!). But you can get the lowest rates, just need to work a bit harder constantly communicating and checking up (but some have to do this with the local bank as well.)
Last time, I had a 30 day lock, I was told at the beginning "no problem closing by then", then after a few days of a lot of activity, total silence. Then day 25 tons of questions from the underwriters (my account had large sums of money coming from abroad and being transferred to several accounts) but I was ready, and we closed on day 29.
The rate was at least 0.375 less than the closest local competitor for the same amount of fees.
But again, YMMV.