Why use a mortgage broker instead of going direct to a lender?

Posted on May 01

Question: Why use a mortgage broker instead of going direct to a lender?

For every benefit of one, there is normally a correlating benefit to the other. Some people like the security of a complete banking relationship, whereas, others would prefer to save an 1/8 discount point that a broker might be able to provide.

You’re never wrong working with an originator that you know you can trust.

How does pre-qualification work?

Posted on May 06

Question: If I work with a mortgage broker, do they actually ask the lenders to do the pre-qualification or do they actually do it themselves? how does it work?

The ‘normal’ process for a Pre-Qualification would involve the originator completing an application, pulling your credit, and reviewing your income & assets. A next step would include running your application through and electronic Underwriting process.

If you have a typical situation, the process is the same for a single person mortgage broker to the largest bank.

The impact on credit scores is more complicated, but, if you’re going to buy a home, your credit will need to be pulled, which will impact your score. If you decide to shop around, make sure all lenders pull the reports as close as possible to one another

What do we do about a low-ball appraisal?

Posted on November 28

Question: Back in June, we tried to refinance. Had an appraisal done – house came in at 457k. Husband lost job. It was right before the bank checked his employment history, and so we couldn’t qualify for the mortgage.

Fast forward to last year. Husband has job, everything is in place to refinance. We’re just waiting for the new appraisal. When the appraisal came back, it came in at 415k. A huge difference from 5 months ago. The comps that were used were for un-remodeled houses similar to ours. (We just came out of a major remodel – total gut down to studs, new heating, electrical, plumbing, walls, ceilings, marble & granite baths and high-end kitchen. The new appraisal did use one of the comps that were on the first appraisal, but, he gave our house a much lower value vs this comp than the previous appraisal. There were also inaccuracies on the report on things, like the siding material, floor materials, he didn’t mention hardwood floors. The broker has filed a rebuttal/dispute with the appraisal company to have them look over the appraisal for errors.

Is there anything else that can be done while we’re waiting for the appraisal company to get back to us? The mortgage broker said, he doesn’t think they are going to change the appraisal. It seems so unfair, they can state their opinion, and then, it becomes law with no recourse for the person who actually paid for this thing!!

I would like to point out that, the appraiser’s valuation is not something that can be “low-balled”. The appraiser is a trained professional with education, licensing, and Errors & Omissions Insurance requirements. It is their job to as accurately as possible value the property. They put their license and career on the line with their appraisals.

Each lender has a process to go through to counter/dispute a low value; however, in the crazy market we’re now, it’s really difficult for us to comment, when there is a possibility the comps used 6 months ago have now expired and nearly perfect new ones are available.

It is great, your broker asked someone else to see if there is a problem with the accuracy or the appraisal however, a well trained loan originator should be able to identify problems with an appraisal and not hope someone else will catch them.