Thursday, August 21, 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

Railroad crossing stalemate continues

By Barry Eberling | From Page: A1

 
First day back to school brings laughter, jitters

By Susan Hiland | From Page: A1 | Gallery

Potrero Hills Landfill legal appeals exhausted

By Barry Eberling | From Page: A1

 
Breakfast after the Bell wins support

By Mayrene Bates | From Page: A2, 1 Comment

 
Suisun city employees get pay raise

By Ian Thompson | From Page: A3

 
Fairfield candidates hear about lean, nimble city staff

By Ryan McCarthy | From Page: A3 | Gallery

Free e-waste collection to benefit Scarlet Brigade

By Susan Hiland | From Page: A4

 
Fairfield mayor to appear at GOP dinner

By Susan Hiland | From Page: A4, 2 Comments

Girls on the Run seeks volunteer life coaches

By Ian Thompson | From Page: A4

 
College finalizes police department takeover, OKs bond plan

By Amy Maginnis-Honey | From Page: A4

 
Weather for Aug. 21, 2014

By Daily Republic | From Page: B10

Fairfield police log: Aug. 19, 2014

By Susan Hiland | From Page: A10

 
Suisun City police log: Aug. 19, 2014

By Susan Hiland | From Page: A10

.

US / World

Militants use British killer as propaganda

By The Associated Press | From Page: A1

 
Governor criticizes new-hire pension enhancements

By The Associated Press | From Page: A1

US mission to rescue hostages in Syria failed

By The Associated Press | From Page: A1

 
US official: More airstrikes in Iraq

By The Associated Press | From Page: A1

Beheading spurs new attacks on Islamic militants

By The Associated Press | From Page: A1, 1 Comment

 
School sorry for making special ed kids sort trash

By The Associated Press | From Page: A4

Police seek mystery pair in selfies after burglary

By The Associated Press | From Page: A4

 
Teens deny threatening boy in school shooting plot

By The Associated Press | From Page: A5

Panel OKs state librarian despite initial concerns

By The Associated Press | From Page: A5

 
North Korea insults John Kerry over his looks

By The Associated Press | From Page: A10

Ukrainian govt troops take over much of Luhansk

By The Associated Press | From Page: A10

 
Picture emerges of officer in Ferguson shooting

By The Associated Press | From Page: A10, 2 Comments

Navy kicks out 34 for nuke cheating

By The Associated Press | From Page: A10

 
CHP says officer may face serious beating charges

By The Associated Press | From Page: A10, 1 Comment

8 homes destroyed, 1,500 threatened by wildfire

By The Associated Press | From Page: A10

 
Drought has state debating its unregulated pumping

By The Associated Press | From Page: A10

Holder says he understands mistrust of police

By The Associated Press | From Page: A10

 
Liberian slums barricaded as Ebola sets new record

By The Associated Press | From Page: A10

.

Opinion

Editorial Cartoons: Aug. 21, 2014

By Daily Republic Syndicated Content | From Page: A7

 
California needs pedestrian-friendly neighborhoods

By Letter to the Editor | From Page: A7, 1 Comment

 
Tell the story, don’t be it

By Ruben Navarrette | From Page: A7

 
We’re spending way too much on raising our kids

By Megan Mcardle | From Page: A7

.

Living

Today in History: Aug. 21, 2014

By The Associated Press | From Page: A2

 
Community Calendar: Aug. 21, 2014

By Susan Hiland | From Page: A2

Horoscopes: Aug. 21, 2014

By Holiday Mathis | From Page: A9

 
Why do parents drink alcohol after their children’s games?

By Kathy Mitchell and Marcy Sugar | From Page: A9

.

Entertainment

TVGrid

By Daily Republic Syndicated Content | From Page: A5

 
Emmys: Billy Crystal to pay tribute to Williams

By The Associated Press | From Page: A6 | Gallery

And the Emmy winners are…? We’re happy to guess!

By The Associated Press | From Page: A6 | Gallery

 
Aniston, Hamm, Hudson set to Stand Up to Cancer

By The Associated Press | From Page: A6

.

Sports

Peavy pitches Giants to 8-3 win over Cubs

By The Associated Press | From Page: B1

 
WR Stevie Johnson adds depth to 49ers

By The Associated Press | From Page: B1

Fairfield boxer Avila set to put perfect 15-0 record on the line

By Brian Arnold | From Page: B1 | Gallery

 
Giants win protest, rain-shortened game to resume Thursday

By The Associated Press | From Page: B1

A’s stumble and must regroup with Angels coming

By The Associated Press | From Page: B1

 
Raiders FB Reece’s injury not as bad as feared

By The Associated Press | From Page: B1 | Gallery

Reality check for Phelps at Pan Pacific Champs

By The Associated Press | From Page: B2

 
Kent State starting center dies at 21

By The Associated Press | From Page: B2

Serena Williams seeded No. 1 at US Open; Halep 2nd

By The Associated Press | From Page: B2

 
Tony Stewart skipping 3rd straight race after Ward’s death

By The Associated Press | From Page: B2 | Gallery

Las Vegas spoils Mo’ne’s night, beats Philly 8-1

By The Associated Press | From Page: B2 | Gallery

 
Sharks F Torres undergoes surgery on right knee

By The Associated Press | From Page: B2

US routs Dominicans in exhibition as Rose rests

By The Associated Press | From Page: B2

 
Schilling blames chewing tobacco for mouth cancer

By The Associated Press | From Page: B2

Sports on TV for Thursday, Aug. 21, 2014

By Paul Farmer | From Page: B4

 
This date in sports history for Thursday, Aug. 21, 2014

By The Associated Press | From Page: B4

.

Business

BofA reaches $17B settlement with US

By The Associated Press | From Page: B5

 
Brine firm sues over biblical fracking billboard

By The Associated Press | From Page: B5

Apple’s stock bounces back to hit a new high

By The Associated Press | From Page: B5

 
.

Obituaries

David G. Gibson

By Nancy Green | From Page: A4

 
Charles (Chuck) H. Doty

By Susan Hiland | From Page: A4

George ‘Wayne’ Hause

By Nancy Green | From Page: A4

 
Sharon Ilene Boyd

By Nancy Green | From Page: A4

.

Comics

Zits

By Daily Republic Syndicated Content | From Page: A8

 
Peanuts

By Daily Republic Syndicated Content | From Page: A8

Blondie

By Daily Republic Syndicated Content | From Page: A8

 
Dilbert

By Daily Republic Syndicated Content | From Page: A8

Frank and Ernest

By Daily Republic Syndicated Content | From Page: A8

 
For Better or Worse

By Daily Republic Syndicated Content | From Page: A8

Beetle Bailey

By Daily Republic Syndicated Content | From Page: A8

 
Get Fuzzy

By Daily Republic Syndicated Content | From Page: A8

Baby Blues

By Daily Republic Syndicated Content | From Page: A8

 
B.C.

By Daily Republic Syndicated Content | From Page: A8

Baldo

By Daily Republic Syndicated Content | From Page: A8

 
Pickles

By Daily Republic Syndicated Content | From Page: A8

Garfield

By Daily Republic Syndicated Content | From Page: A8

 
Sally Forth

By Daily Republic Syndicated Content | From Page: A8

Wizard of Id

By Daily Republic Syndicated Content | From Page: A8

 
Rose is Rose

By Daily Republic Syndicated Content | From Page: A8

Word Sleuth

By Daily Republic Syndicated Content | From Page: A9

 
Cryptoquote

By Daily Republic Syndicated Content | From Page: A9

Bridge

By Daily Republic Syndicated Content | From Page: A9

 
Crossword

By Daily Republic Syndicated Content | From Page: A9

Sudoku

By Daily Republic Syndicated Content | From Page: A9