AAA Blog

Should you use a broker?  It costs more to use one. Right?  My bank is cheaper!  Not so fast....there is some fact and some myth.  The mortgage broker was born as the banks appetite to lend extended beyond its capacity to create new business and do so cost effectively.  To put thousands of agents on salary to originate loans was not an effective game plan.  The mortgage broker could find business for the bank and work as a subcontractor to expand the banks lending platform.  The bank in term would share the profit generated by the transaction.  This freedom allowed the broker to structure a small business model that had the ability to undercut the retail rate structure of the bank.  It is a fact that mortgage brokers have the power to be cheaper than the bank.  The problem is that not all mortgage brokers are created equal and many chose to charge beyond the banks fees.  It is important that you find a mortgage broker with a business model that competes with the banks. 

"My closing costs are less at the bank".  This is often true.  However, the interest rate is often higher at the bank.  If you look a few months down the road you will find that the monthly savings will quickly offset any additional expense that you may realize initially. 

I have often said that having a mortgage broker is like having an attorney when you go to court.  There are many rules and regulations that govern the lending markets.  You need someone that can guide you through the process and rules to insure the best result.  You can go to court alone and face the judge, but it always feels better to have someone next to you that knows the system.