Are you considering refinancing your home with one of today’s best mortgage companies like Quicken Loans? You might wonder if it’s better to use a broker or go straight to the lender for your refi? The mortgage industry is constantly evolving and several major players are leaving the mortgage business behind. Here are several things to consider before choosing a broker or a direct lender for your next home loan.
Fewer Choices Is Never a Good Thing
Refinance mortgage rates have been stuck just below four percent for several weeks causing many lenders to get out of the mortgage business altogether. MetLife, Citigroup and Bank of America have all cut back or stopped originating home loans. Why are so many lenders scaling back or getting out of the mortgage business completely?
The lenders that aren’t getting out of the business are choosing to no longer work with mortgage brokers. If you choose to work with one, your mortgage broker is an independent professional that resells loans for wholesale lenders for a commission.
Even though this commission is typically paid by the borrower, many lenders are ending their relationships with brokers to try and keep more of their profits. One side effect of the lowest refinance rates in 60 years has been dwindling profits for mortgage lenders. Cutting out the middle man keeps more profit in-house. Lenders are also pointing fingers at mortgage brokers for the financial meltdown in the banking industry. The lenders are claiming they want more control over quality and can prevent another economic disaster by cutting out mortgage brokers.
Should You Choose a Mortgage Broker to Arrange Your Refi
While it’s convenient for banks and lenders to point fingers at brokers for the financial crisis there are a lot of honest, hard-working brokers originating home loans. Brokers are able to leverage their relationships with their clients and lenders as a low-cost workforce for the mortgage lenders. (a win-win) The fact that so many wholesale lenders are terminating their relationships with brokers is a loss for everyone. Brokers have less access to wholesale home loans and homeowners have fewer choices when it comes to mortgage refinancing.
As a homeowner one of the burning questions you’ll need to answer is who is offering the lowest refinance mortgage rates. Finding the best mortgage lenders isn’t necessarily going to guarantee you the lowest rates or fees. The mortgage lender doesn’t care if you get a good deal. They want you to pay as much as possible closing on your new home loan.
One advantage of working with a good broker is that they’ll be able to place you with lenders offering the lowest refinance rates without unnecessary points or junk fees. You’ll benefit from the broker’s experience; having the right professional in your corner will save you thousands of dollars from unnecessary markup, discount points and fees.
You can learn more about finding the right mortgage broker to get you the lowest refinance rates from the best mortgage companies without leaving money on the table by checking out my free Underground Mortgage Videos.