Have you ever known something to be true, I mean to your bones, and you just couldn't understand why everyone else didn't see it? And it becomes your mission to show people the light?
There's an old Yiddish expression for just these moments, "To a worm in horseradish, the world is horseradish." And for Bill and Cathy Early of PlumDog Financial, selling mortgages through their brokerage in Asheville, NC, has been their horseradish for the last 30 years.
I recently had the opportunity to speak with the Earlys and asked them why borrowers should choose a brokerage instead of a bank. And today, I have their top seven reasons.
1. There isn't a clear advantage on rates
Surprise! Working directly with a bank doesn't guarantee you better rates, in fact, according to Cathly Early, "Since we have relationships with dozens of banks, we'll always be competitive, if not better."
2. You're more likely to get approved
If your credit rating, income, and assets are all in great shape, then it may never be a problem. For the rest of us, however, it's a fantastic benefit to work with a broker that will shop your loans to several lenders. The more lenders who see your application, the greater the chance your loan gets approved.
3. They handle the loans from start to finish
According to Bill Early, "getting a mortgage is one of most stressful situations... in fact, mortgage means death in Latin." Therefore, doesn't it make sense to have someone, the same someone, there from when you start your loan to when you finish it?
With a brokerage, specifically PlumDog Financial, that's exactly what you'll get. According to the Earlys, banks have what's called a "central processing area," meaning your loan may get passed around -- which, if you ask this investor, doesn't sound particularly comforting.
4. Brokers are licensed
Mortgage brokers have to be certified in order to operate -- this includes testing, continuing education, and background checks. Therefore, regardless of the state, you can be sure your mortgage broker is both knowledgeable and not a criminal -- which seems pretty important.
Mortgage bankers, on the other hand, aren't always required to obtain the same types of certifications. In many cases they are, but the rules are different from state to state. So, for that reason, knowing your state's regulations and the experience level of the broker or banker is essential.
5. One-trick pony
What if all you need is one trick? Wouldn't you want whatever pony is the best at that one trick? The mortgage process is a complex one, much more complex than I had ever imagined, and there are a number of things that can go wrong along the way.
This is another reason the Earlys suggested their brokerage, "This is all we do, we're going to know how to do it... there isn't much we haven't seen."
6. Brokers work on commission
Upselling will occasionally happen in the mortgage brokerage business but, as the Earlys explained, for those who depend on referrals, it's just bad business.
Also, businesses that work on commission are more likely to push your loan through quickly, and considering borrowers: 1) want to lock in rates, 2) get into their new home, and 3) avoid a prolonged stressful situation, it seems advantageous to have someone interested in hurrying the process along.
7. Better loans happen in person
According the Earlys, having someone to help you get approved is only the start.
The real benefit, they suggested, is having an experienced broker to help borrowers decide on a monthly rate. As Bill mentioned, "you have to look at the client's nonverbal behavior, and get an idea of what they're comfortable with... they might be able to afford something but not be comfortable with it."