Raguragavan Sreetharan | Mortgage Banker VS Mortgage Broker

Raguragavan Sreetharan | What a great question and one that many find very confusing. First of all let’s start at the beginning of a home loan. When you apply for a home loan the very first thing you are going to need is a lender. A financial lender is someone that is going to supply you with the financing of your home loan. Whether you go FHA, Conventional, VA or where I live in Texas, you can receive a Texas Vet loan, you are going to need financing…unless of course you pay cash, then you can skip this article altogether.

Raguragavan Sreetharan

Raguragavan Sreetharan | WHAT HAPPENS?

When you start your home loan process you could spend all day on the internet looking at rates, various mortgage “broker” companies and find that they are basically all the same. Whether you go the banker or broker route, you are going to supply either one of them with very personal information such as your credit report which they will run, your tax returns (if self employed), W-2’s, pay-stubs, bank statements, your driver’s license and your social security card. Many people don’t realize that when you give it to a broker, it is usually packaged up and sent outside of the State you actually reside in. Note: Most Identity Theft issues arise outside of the State you live in.

Raguragavan Sreetharan | WHAT ABOUT BROKERS?

Your loan file is a snapshot of who you are and your credit worthiness. When supplying a “broker” these documents keep in mind that if you are dealing with an internet operated lender, you will most likely not speak to the same person twice, your file could very well be processed in a city outside of the State you reside in and when your file goes to the next step, which is to the underwriter, it may very well go to another part of the country once again. The realization is that a broker basically has absolutely no control over your file once it leaves their hands. You might call up and have to speak to someone that needs to speak to someone else to track down your file and find out exactly where it is.

I’ve heard that in some cases, it may take a day or two just to get back to you after they find out where your file is. From the realtor, to the loan officer, the processing department, the underwriter, title companies, insurance agents et al, about 50 people (give or take) actually come in contact with a loan file. So…consider the fact that you have excellent credit. Do you really want someone with so little control of your personal documentation taking charge of your life like that? I didn’t think so. Please note: I am not bashing the Mortgage broker industry. There are some very decent people and some decent companies out there. All I am saying is to be careful when you purge yourself into electronic oblivion, that’s all.

MORTGAGE BANKERS | Raguragavan Sreetharan

A mortgage “banker” uses their own money and for the most part has all services in house. Your file will never leave that office and you can actually go in to meet with someone face to face. For many folks, that is the only way they like to conduct business. Processing, underwriting, closing and funding should all happen under one roof when dealing with a mortgage banker. It is very comforting for people to be able to call up their loan officer, anytime and find out what stage their loan is in. A good loan officer will not only call up the client (you) but will also keep in touch with your realtor (buyer’s agent) as well as the listing agent, who represents the seller.

Raguragavan Sreetharan -A good form of communication should be established right from the get-go. Most realtors today have a preference of dealing with bankers only because they know that lender and can trust that the file is in-house and they can find out with one phone call what’s happening to the file. A banker is more inclined to be able to solve problems faster than a broker only because his in house staff alerts them to any issues that may arise with dispatch. The quicker he/she can jump on the problem, the faster the fire gets extinguished.

Raguragavan Sreetharan I’ll give you an example. Let’s say you have your movers coming to your house to pack up your belongings and you have set time that you know when your arrival is at your new home. The phone rings and it is your “broker.” “Mr. Smith…the underwriter working on your file is requesting you supply us with better documentation on your work history for the last two years before you start your new position next week.” Your first impression is, “Why didn’t he ask me for that when I gave him all my paperwork?” You have the movers coming, you’re packed up and your lender is asking for documentation at the eleventh hour. I’m not saying that this could happen. I’m saying that it is my experience that I have seen happen and one that may have been addressed had there been better control over the file.