Saturday, September 20, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

A mortgage loan broker versus a bank mortgage, what’s the difference?

By
From page C2 | January 26, 2013 |

Q:  Can you kindly, and urgently, advise me regarding what the difference is between choosing a mortgage loan broker and going directly to the bank for a mortgage? How much should a fair broker charge for his services? Thanks.

A:  Your last sentence sounds like you’re in the real estate industry and teeing up the ball for any number of loan broker jokes. But I’ll spare us all and move on to your question.

In short, the business model for the two are different, but the result for the customer is largely the same.

The banks use loan officers who are generally paid a small salary with the bulk of their money coming from commissions.

Mortgage brokers are typically independent contractors. That is, they essentially run their own business, just like a Realtor does. They are paid strictly on commission. And just like a Realtor, this is true even when the loan officer appears to work for a brokerage company.

An “in-house” bank loan officer has the possible advantage of having a very close relationship with the inner workings of the bank. He or she may have private numbers and emails that can occasionally help get logs unjammed.

On the other hand, a bank’s loan officer is usually pretty limited in the number of programs they can put their customer into.

While I’ve known of banks that allow their loan officers to broker loans for other companies if they are unable to use a bank program, I think this is rare.

Generally, if you go to a bank to get a loan you’re going to get a loan from that bank.

A mortgage broker can have a relationship with any number of banks.

That can afford the broker the ability to be more flexible. If you don’t qualify for a loan from Bank A, perhaps the broker can redirect your application to Bank B.

However, for this service, the loans can be a little more expensive, or at least appear so.

Loan brokers typically get paid through fees generated in the transaction. Loan origination fees are an example.

Those fees may not be as high if you walk into a bank.

However, remember that both types of loan officers make a commission. The money for that commission has to come from somewhere, i.e. you. But at the bank they can be absorbed through prepaid interest points or interest in general.

By the way; you’ll note that the whole “in-house verses broker” analysis is exactly the same as what we’re used to in the insurance world.

I’ve had mortgages and insurance through both types. I can’t tell you that I have a preference for one type of loan officer over another, any more than I do with insurance.

I think it’s far more important to be dealing with a loan officer who is knowledgeable and with whom you have a sense of trust. The corporate name on top of the business card is very secondary.

Regarding fees, I don’t know if there is a rule of thumb. However, the law requires all prospective borrowers to get a document that provides a good faith estimate of the annual percentage rate, or APR.

This calculation takes into account loan fees with the goal of showing the borrower how much, after the smoke clears; the borrower is really paying for the loan.

And APR statement can’t show you which loan is better for you. That’s far too personal and complicated, which is why you have to have some trust in your loan officer. But it does allow you to compare costs.

That’s why I’d suggest to you and anyone else that you talk to two or three loan officers to see what they have to offer you, including what it will cost.

Tim Jones is a real estate attorney in Fairfield. If you have any real estate questions you would like to have answered in this column you can contact him at SolanoScene@TJones-Law.com.

LEAVE A COMMENT

Discussion | No comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

.

Solano News

Solano jobless rate drops, jobs rise

By Barry Eberling | From Page: A1

 
Parsons files FPPC complaint against Bertani

By Barry Eberling | From Page: A1

 
Memorial focuses on hope, healing from addiction

By Amy Maginnis-Honey | From Page: A1 | Gallery

Travis celebrates KC-10′s 20 years at base

By Ian Thompson | From Page: A3 | Gallery

 
Highway 37 detours in place

By Amy Maginnis-Honey | From Page: A3

 
Vallejo man faces deportation after guilty pleas

By Jess Sullivan | From Page: A3

New law aimed at urban water district reports

By Amy Maginnis-Honey | From Page: A3

 
Maintenance begins on Rio Vista Bridge Sunday

By Amy Maginnis-Honey | From Page: A4

 
Fairfield police log: Sept. 18, 2014

By Susan Hiland | From Page: A9

 
Suisun City police log: Sept. 18, 2014

By Susan Hiland | From Page: A9

.

US / World

Record-setting retardant used on California fire

By The Associated Press | From Page: A1

 
Oakland mother charged in cocaine death of son, 2

By The Associated Press | From Page: A4

UC campus chancellors granted hefty pay raises

By The Associated Press | From Page: A4

 
Brown vetoes diaper changing-station bills

By The Associated Press | From Page: A4

Feds approve California’s immigrant license words

By The Associated Press | From Page: A5 | Gallery

 
California man accused of killing fellow gym-goer

By The Associated Press | From Page: A5

California school gender equity ruling upheld

By The Associated Press | From Page: A5

 
State to ban smoking at home day cares

By The Associated Press | From Page: A5

Driver of stolen van that hit dog gets prison time

By The Associated Press | From Page: A5

 
License plate scanner networks capture movements

By The Associated Press | From Page: A5

Fence-jumper makes it into the White House

By The Associated Press | From Page: A9

 
Florida town knew shooter had troubled past

By The Associated Press | From Page: A10

Daughter calls Utah doctor a monster at sentencing

By The Associated Press | From Page: A10

 
3 guilty in Ga. salmonella-tainted peanut trial

By The Associated Press | From Page: A10

Fierce fighting in Yemeni capital kills 120

By The Associated Press | From Page: A10

 
Sierra Leone begins 3-day Ebola lockdown

By The Associated Press | From Page: A10

Ambush suspect could be aided by dense woods

By The Associated Press | From Page: A10

 
France joins US against Islamic State over Iraq

By The Associated Press | From Page: A10

After vote to stay in UK, Scots must heal divide

By The Associated Press | From Page: A10

 
.

Opinion

Fairfield Ford boost animal adoption efforts

By Letter to the Editor | From Page: A8

 
.

Living

Community Calendar: Sept. 20, 2014

By Susan Hiland | From Page: A2

 
Make sure you get educated during Ovarian Cancer Awareness Month

By Kathy Mitchell and Marcy Sugar | From Page: A7

.

Entertainment

 
Fallon to pay up, broadcast show in Chicago

By The Associated Press | From Page: B9

 
TVGrid

By Daily Republic Syndicated Content | From Page: B9

.

Sports

Legs power Mustangs in win over Falcons

By Nick DeCicco | From Page: B1 | Gallery

 
Indians score late but still fall to Panthers

By Marcus Lomtong | From Page: B1

A’s Lester holds Phillies to 5 hits in 7 innings in 3-1 victory

By The Associated Press | From Page: B1 | Gallery

 
Big plays in second half lift Vanden past Center

By Paul Farmer | From Page: B1

Raiders could be down 2 starters on defense

By The Associated Press | From Page: B2 | Gallery

 
Sharks open with new vibe after playoff collapse

By The Associated Press | From Page: B2

49ers’ Davis, McDonald questionable for Sunday

By The Associated Press | From Page: B2

 
Rio Vista gets easy football win over Delta

By Daily Republic staff | From Page: B2

Stewart slogs through tough day at New Hampshire

By The Associated Press | From Page: B2

 
Keselowski wins pole at New Hampshire

By The Associated Press | From Page: B2

Gordon has suspension reduced to 10 games

By The Associated Press | From Page: B2

 
After NFL, baseball addresses domestic violence

By The Associated Press | From Page: B2

Goodell: ‘Same mistakes can never be repeated’

By The Associated Press | From Page: B2

 
Kershaw gets 20th win as Dodgers pound Cubs 14-5

By The Associated Press | From Page: B2

 
This date in sports history for Saturday, Sept. 20, 2014

By The Associated Press | From Page: B3

.

Business

The Kuro taste: Peppery tang and hint of squid ink

By The Associated Press | From Page: B4

 
Pabst Brewing to be sold to Russian company

By The Associated Press | From Page: B4

China fines GlaxoSmithKline $492M for bribery

By The Associated Press | From Page: B4

 
Procter & Gamble cancels on-field NFL promotion

By The Associated Press | From Page: B4

California adopts olive-oil labeling standards

By The Associated Press | From Page: B4, 1 Comment

 
Yahoo rakes in another jackpot from Alibaba’s IPO

By The Associated Press | From Page: B4

Alibaba stock soars in jubilant trading debut

By The Associated Press | From Page: B4

 
.

Obituaries

George Junior Rhode

By Nancy Green | From Page: A4

 
Charles Randolph Orr

By Susan Hiland | From Page: A4

Corazon Libunao Thompson

By Susan Hiland | From Page: A4

 
Allie M. Zell-Jones

By Susan Hiland | From Page: A4

.

Comics

Pickles

By Daily Republic Syndicated Content | From Page: A6

 
For Better or Worse

By Daily Republic Syndicated Content | From Page: A6

Beetle Bailey

By Daily Republic Syndicated Content | From Page: A6

 
B.C.

By Daily Republic Syndicated Content | From Page: A6

Garfield

By Daily Republic Syndicated Content | From Page: A6

 
Sally Forth

By Daily Republic Syndicated Content | From Page: A6

Frank and Ernest

By Daily Republic Syndicated Content | From Page: A6

 
Zits

By Daily Republic Syndicated Content | From Page: A6

Baldo

By Daily Republic Syndicated Content | From Page: A6

 
Dilbert

By Daily Republic Syndicated Content | From Page: A6

Peanuts

By Daily Republic Syndicated Content | From Page: A6

 
Rose is Rose

By Daily Republic Syndicated Content | From Page: A6

Blondie

By Daily Republic Syndicated Content | From Page: A6

 
Word Sleuth

By Daily Republic Syndicated Content | From Page: A7

Crossword

By Daily Republic Syndicated Content | From Page: A7

 
Sudoku

By Daily Republic Syndicated Content | From Page: A7

Bridge

By Daily Republic Syndicated Content | From Page: A7

 
Cryptoquote

By Daily Republic Syndicated Content | From Page: A7

.

Home Seller 09/20/14

Average US 30-year mortgage rate at 4.23 percent

By The Associated Press | From Page: HSR2

Real estate transactions for Sept. 20, 2014

By Daily Republic | From Page: HSR3

New Standard Pacific models in Vacaville

By Daily Republic | From Page: HSR3