Mortgage Lender: Broker or Banker?

“I am looking for a mortgage lender in Phoenix” said the prospect over the phone. He was referred by a friend and I had been expecting his call all week.  He said they were moving to the Phoenix area from the Midwest. We started talking about the type of loan he was interested in and the types of mortgage loans he had used in the past. In the course of the conversation I told him that I was a mortgage broker in the Phoenix area and that I help people obtain mortgage loans best suitable for their long term financial success. This is where the conversation became interesting.

“So, you are a mortgage broker in Phoenix? I know what a bank is but what does a mortgage broker do?” Specifically, he was unsure of why he should deal with a broker when he could just go to a bank. He confessed that had done only a few real estate transactions in the past and all of them with banks.

I proceeded to explain that I was both a mortgage banker and a mortgage broker and my company was licensed in the state to act as both. We are a bank in the sense that we can lend our own money using in-house loan products. I told him this had its limits since the loan portfolio could help only a certain percentage of the population. I said, “Remember, a bank is someone who will lend you an umbrella on a sunny day.”  He laughed.

There are those clients and instances when I have to go outside of my company for the loan and this is when I wear my broker hat. With access to hundreds of lenders and loan products I can pretty much find a competitive loan for any borrower in any circumstance. There are restrictions on what I can do for them depending on credit, income, asset issues of the potential borrower, but for the most part I can deliver a very completive home loan. The mortgage broker role enables me to look at all the available options for a prospect.

My prospect wanted an example, so I gave him two scenarios. The first was about Jenna, a young lady living in Phoenix, a few years out of college, with a decent credit score, say 655. She has some college debt and has some money to put towards closing costs, however, none for a significant down payment. I told him that it is very likely that she will not have the best 100% financing package from just a run of the mill bank. In fact she shouldn’t settle for just a quote from a simple banker, she needs to work with a broker who can do some work for her and find her a lender that specializes in borrowers like her.

The second story was about Bruce, a middle aged man living in Scottsdale, with very good credit and a strong asset base. He would be very well served by a pure banker but working with a broker he can put his mind at ease knowing that he exhausted all of his options. Someone like Bruce needs to know what he doesn’t know and as a mortgage broker I can present the best possible home loan on the market.

After the two illustrations, my prospect eventually understood the value of having a mortgage banker/broker on his side. I was able to put together a few financing package suitable for his needs. We discussed the pros and cons of all the different options and closed on the loan, knowing that he was well positioned for financial success.

The moral of the story is that you should work with a knowledgeable and experienced mortgage banker/broker. This type of professional will present the different financing options for you and work with you in determining the best loan solution for your mortgage needs! Remember a mortgage can be almost 40% of your expenses and is the biggest component driving your financial success.

Note: I used components of conversations and dealings with different borrowers to piece this story together. It is not a single unit story.

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