8 Reasons to Get Your Mortgage From a Banker

After speaking with a 30-year veteran of the mortgage industry, I collected eight of the most important reasons to buy your mortgage from a banker.

Jan 25, 2014 at 12:23PM


Have you ever wondered what the Building and Loan Bank in "It's a Wonderful Life" would be like in real life? 

Steve Habetz Jr., the vice president of Stamford Mortgage -- and a 30-year veteran of the mortgage industry -- explained that's the type of bank he works for. 

Steve sent me some feedback on my article, "7 Reasons to Get Your Mortgage From a Broker," and suggested that since the financial crisis, loans made by brokers have been under intense scrutiny -- and that's not how valued customers should be treated.

Without a moment's hesitation, I replied to Steve's email and asked for an interview.

He graciously agreed, and we spent over an hour discussing the benefits of buying a mortgage from a bank. Here are eight of the most important reasons.

1. Loans get approved faster
After shopping your loan around to lenders, it may take brokers a few months to push your loan through. Since banks have the final say on loan approval, it can substantially speed up the process. 

According to Steve, he will consistently close loans in a matter of weeks -- and on occasion, even less.

2. Banks make the rules, so only banks can bend them.
QM loans -- or, quality mortgage loans -- are essentially Fannie Mae and Freddie Mac's guidelines for buying mortgages. And in the past few years, these guideline have become extremely rigid.

Steve suggested, "Since we hold a large portion of the loans we make, we have the flexibility to make non-QM loans.

This is the big one, because banks hold assets (loans), the full brunt of bad loans falls on their head. This gives banks the incentive to make good loans, and also the autonomy to make loans that don't fit into Fannie Mae and Freddie Mac's definition of QM loans.

In these cases, Steve suggested, "If I've got someone who really wants to be a homeowner, and has always paid their bills... that's smart lending, it's good for the economy, and it's good for our country."

3. "The vast number of lenders available to brokers has shrunk."
Brokers depend on outside lenders to pick up the loans they make. According to Steve, however, "Since the financial meltdown, broker loans have been viewed by the marketplace as toxic assets."

Steve explained, "There are a lot of good, qualified, honest, and knowledgeable mortgage brokers in the marketplace, unfortunately none of them have the capacity to buy back the loans they make." Steve would go on to say, "As a result, borrowers need to know they will be subject to a far higher level of scrutiny."


4. Brokers have no control over two key aspects of the loan process
Steve suggested that not only is he there for the person getting approved, he's there for the loan in two key phases of the process: approving the loan, and closing the loan. 

Steve went on to point out that since his bank holds a majority of the loans they make, he can be there for customers for years after the loan is made. 

5. "As a bank employee, I am registered with the NMLS."
In my previous article, I noted that brokers will always have a license -- while that may not always be the case for bankers. This is important because the licensing process -- which varies by state -- includes a background check and continuing education.

To which Steve jested:

Dave... have you ever worked for a bank? Banks don't let you hand out its money without a full background check. And most banks require significantly more hours of continuing education.

While Steve is a banker, he took the brokers continuing education course this past December -- which, in all, took about eight hours. His bank, on the other hand, demands 20 hours of continuing education each year.

6. Turns out banks have one-trick ponies, too
Mortgage brokers do one thing and one thing only, and that's handle mortgage loans -- and for banks, it tends to work the same way.

Steve explained -- while there are some exceptions -- normally there's a team for each type of loan. He noted that it's better to be an expert in one area than to have even small gaps in your knowledge about several different types.

7. Bankers are also paid on commission
Bankers, unlike brokers, have some options as to how they'll be paid. They can be paid on salary, strictly commission, or a combination of the two.

It may be awkward to ask your banker whether they'll earn a commission, but it's an important question. This is because brokers -- regardless of their ability level -- will be paid on commission. Bankers, on the other hand, will only choose to make  a commission if they're confident they can get the job done quickly and efficiently.

8. We can all agree, the best loans happen in person
Whether borrowers choose a banker or a broker for their mortgage, Steve agrees the best policy is sitting down and talking over your options. 

Buying a mortgage will be one of the biggest decisions you'll make in your lifetime, and it deserves the full attention of someone sitting in front of you -- I'm looking at you, Quicken Loans.

Looking deeper into your finances and retirement
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have done it before with the likes of Amazon and Netflix. And now they think they've done it again with three stock picks they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.

Dave Koppenheffer has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Netflix. The Motley Fool owns shares of Amazon.com and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers