Mortgage Question - Broker vs Credit Union - Your Experiences

Everytime the topic of getting a mortgage comes around, people are always suggesting credit unions. 

I'm a member of a good one - Alliant Credit Union based out of Chicago - but they are remote - I'm in Arizona. 

Last time we used a mortgage broker, Academy Mortgage, who while convenient, didn't seem to be working in our favor for mortgage rates. Our rate when from 3.9% to 4.75% by the time we closed. Then immediately our mortgage was transferred to Wells Fargo - which was ok because we already some accounts with them. 

What's the scoop on brokerages vs credit unions for mortgages? 

I loved my CU in TX and really wish they did accounts in Colorado. With them I knew that they were going to be my go to for everything and I didn't have the risk of them selling it off to who ever. 

With the broker I just talked to I asked them what kind of guarantee I had that who ever I chose wouldn't just sell it who ever in 30 days after close. I knew the answer....It was none. I gladly paid a little more to have the mortgage with a provider I knew.

Before even reading your post, I was thinking about cautioning you to avoid a broker so your loan wouldn't end up being sold to Wells Fargo.

I could elaborate, but my experience was when WF bought the loan on my practice, not a home loan. I'll summarize, they sold my half million dollar grossing business on Craigslist, after refusing my offer of $200,000 to buy out the loan.

I'll never recover from that. 

Pheller said:

Last time we used a mortgage broker, Academy Mortgage, who while convenient, didn't seem to be working in our favor for mortgage rates. Our rate when from 3.9% to 4.75% by the time we closed. Then immediately our mortgage was transferred to Wells Fargo - which was ok because we already some accounts with them. 

That is unusual that your rate when up. Once you lock, you lock. Are you sure you were not comparing APR vs rate? There is a difference there. 

Regarding who to use, I think the broker I used on my first house did not get me what was best for me but what she got the most commission for. I learned that later on. This does not mean all brokers are the same, just my experience. 

My last two houses I went through Suntrust bank. They were excellent to work with. 

I also had a good experience refinancing a house through Quicken Loans, I believe they are Rocket Mortgage now. 

Floating Doc said:

I could elaborate, but my experience was when WF bought the loan on my practice, not a home loan. I'll summarize, they sold my half million dollar grossing business on Craigslist, after refusing my offer of $200,000 to buy out the loan.

I'll never recover from that. 

That sucks. Couldnt you buy it through the Craigslist ad??

The problem was because it was 6 months between our initial application and the purchasing of the house, our rates went up subject to the Fed. 

I couldn't lock in a rate until our offer got accepted. 

In reply to pheller :

I see. Yes, 6 months is a long time. I am not sure that’s the broker’s fault as it could have gone either way. 

I’ve had mortgages sold. Nothing changes. What’s the problem with that?

Slippery said:

Floating Doc said:

I could elaborate, but my experience was when WF bought the loan on my practice, not a home loan. I'll summarize, they sold my half million dollar grossing business on Craigslist, after refusing my offer of $200,000 to buy out the loan.

I'll never recover from that. 

That sucks. Couldnt you buy it through the Craigslist ad??

Sure, and piss off the bankruptcy judge, too. My lawyer shot that one down, and since he was a board certified bankruptcy specialist that the court went to when they had questions, I figured I better take his advice.

I am a Mortgage Broker and I have been a Banker and worked for a Bank.  I've done this since 1974.

Let me share with you some numbers I've developed over the past month.  Brokers have a protection factor built in for you.  They are forbidden from making up fake closing costs.  Banks wrote the new law and they can make up anything they want.

Fannie, Freddie & Ginnie set the rates they are willing to pay for certain loan types and situation. There is no economies of scale that allows a big bank to get a better rate.  All lenders begin with the same cost, the cost to you is determined by their profit margin.

Suddenly closing costs and rates are skyrocketing at Banks, Bankers and CUs - because they can.

i got a call from a Navy Federal Mortgage loan officer this week shopping for a better rate and costs than she could get at her CU.  She knew Navy Fed was high and that's why she was shopping around.  By the end of the conversation we found out that I was over $4,000 cheaper on closing costs and .5% cheaper on rate.  PROFIT MARGIN!!

Here are some other lenders numbers when compared to a Broker.  These are actual numbers derived from Loan Estimates given to the consumer.

USAA $3,197 extra CC + .375% to rate

Texas Mortgage Capital  $6,016 extra CC + .75% to rate

Loan Depot $4,060 CC same rate

Highlands Residential Mortgage $4,096 extra CC + .25% to rate

DR Horton $7,000 extra CC + .125% to rate

Cendera Funding $4,324 extra CC + .25% to rate

Prime Lending $4,689 extra CC + .375% to rate

Mortgage Financial Services $7,125 extra CC + .25% to rate

Supreme Lending $4,242 extra CC & .5% to rate

For the very first time in history it's as important to shop closing costs as it is to shop rate.  Most Realtors, Lenders, Builder Reps & of course consumers have no idea they can vary by this much.

Loan Origination Fees and Points are not necessary in this market.  You should only expect to pay them if you are getting a below normal rate.

DR Horton is offering a 3.875% rate for FHA/VA & USDA.  It only costs the consumer 1 point and 1% origination fee.  Yesterday I locked 2 FHA loans.  1 was at 3.75% with ZERO points and origination.  The other was at 3.875% with ZERO points and origination.  The difference between the 2 was loan size and credit score.

SHOP!

Get binding loan estimates and look at the fine print.

SHOP!

Online Lenders are the worst you can find. Rates won't be better, costs won't be better and service is nonexistent.  Very few people's situation is good enough for a checkbox type of mortgage.  Big Banks and Online lenders turn down about 60% of all applicants.  They work off of numbers and don't care what that does to you

I am in Texas, DFW  specifically

In reply to carguy123 :

I saw this phenomenon recently. 

I’m shopping in the shopping phase for a cash out refinance to do some updates and debt consolidation. The rate  difference is enough to make financial sense by keeping the term to 15 or 20 years (I’ve got 20 left on the current mortgage).

I found talking with one of the online companies was estimates for closing are more than double the broker for third party costs. Plus the online firm was pushing FHA because they allow 85% LTV, but the increased closing cost and MIP more than offset the high LTV.

I also had a good experience with the same broker last time, with no excessive charges. You need to go into it knowing that the loan is going to be sold.

Not to thread-jack, but I’m more concerned about the appraisal and making sure that goes well, so any tips on that are appreciated. 

Carguy123, sent you a PM

Bank or Credit Union, if they aren't one of the rare institutions that keep their mortgages in house (most don't), they are getting sold off to a big bank, just like a broker. I've had 2 homes, but 3 mortgages (first house was eventually refinanced from a 30 to 10 year note).

First time, I used a broker that originates something like 15% of all loans in Tulsa county. The process was super smooth, quick, and no surprises. Closing took about 30 minutes. I think that mortgage was then sold off to Chase? I don't remember, that was a decade ago. 

When we refinanced, we used Stillwater National Bank in Stillwater, Oklahoma. They keep their mortgages in house and do not sell (at least they did in 2012-2013 when we did the refinance). They were amazing to deal with, cheaper on closing costs and rate, everything. Customer service was also top notch.

My current home (purchased Sept 1, 2017), was done through a broker, and then sold off to US Bank. After the letter I received from them last month, I'm non-plussed. 

Apparently, they have been miscalculating the escrow since the purchase date, and have also raised their escrow minimums. So I basically received 6 weeks notice that, "Hey, yeah. Sorry we screwed and we aren't culpable in any way. But for the next year, your mortgage payment is going up $400/yr, to make up the escrow difference."

Needless to say, I'm still not very pleased.

Avoid Wells Fargo at any cost, they are a bunch of crooks and sleazeballs. I don't care that they have commercials running that say they are different now and "look at us, we're friendly, hard working people just like you" and we're sorry for all the horrible things we have done, but trust us this time we are different. Bullcrap.

I have always worked with mortgage brokers. Mortgage brokers have been able to get me the best rates, the best deals, and the least pain. You have to find someone experienced, that you trust, and you have to read the fine print, but that is true with anything you buy. Find a local broker, they know your market  - including which offers are too good to be true.  

After that, I have had good luck with my local PNC bank. They have handled some refinances and other stuff and have always been reliable and trustworthy for me. My parents, who have purchased many houses, have also had good luck with local banks in small towns. Smaller chains have more flexibility and offer more unique products than the big ones. 

I've worked with my broker on several deals.  He's a straight shooter and gets us awesome rates.   He got us the loan on our current house, then did the refi when the rates were super low about 8 years ago.  Refi got done with no points, no fees and locked a super low rate.

The best advice is to shop around, you are buying money, this is like any other purchase you need to know the final cost. there are all kinds of games played so it is important to get firm quotes from people as you are shopping and if it is early in the deal process, more than say 90 days out, then you will need to repeat the process with your top two or three vendors when you are inside the lock window.

I would not worry about loans getting sold as there are no guarantees that even companies that say they service there own loans do sell them. What ever rate and terms are negotiated with your package go with the loan whomever buys it. The biggest thing I have found servicers screw up is the escrow for property taxes and insurance, seams like simple math is a problem for them. Our county offers a 4% discount on your property tax if you pay in November, but they are not due until March, the last company I let handle that would not pay them until they were due, so I lost out of the 4% discount. They also can collect 14 months of reserves instead of the needed 12, all money I prefer to have in my accounts rather than theirs.

Our last two mortgages were via credit unions (first one local, second one via PenFed). Both ended up getting sold to Freddie Mac, but the servicing was still done via the credit union. In both cases the offers were very competitive or better than what I could get from a broker after we shopped things around a bit.

PenFed was super easy to deal with and I'd happily get another mortgage through them again.

I'd stay away from the big banks for mortgages for a ton of reasons, but at the end of the day you don't have any control over who the loan gets sold to and if they manage to mess up the paperwork in the process or not.

It's funny the escrow errors came up.  My co-worker recently had the same thing come up where the escrow account was insufficient to cover her tax bill so her costs suddenly increased unexpectedly for her (though I'm not sure why it would be unexpected since she can do math too).  She was extremely unhappy and griped loudly about needing to come up with extra money.  Anyway, I thought it was a bad idea for a bank to be further entwined in my life than it needed to be, so I declined to have an escrow situation set up and just pay my own taxes.  It's much simpler that way.  Most people I talk to didn't even realize you can do that.  (maybe it isn't allowed in some loan situations, I don't know)

I dunno how widespread Cap Center is, but we used them for the re-fi.  No closing costs, great rate.  Easy, friendly, no hassles.  They do immediately sell your mortgage though, but I've had no issues with any of the entities we've mailed payments to.  In Virginia at least, mortgage lenders have to follow regulations aimed at protecting the consumer.

1988RedT2 said:

I dunno how widespread Cap Center is, but we used them for the re-fi.  No closing costs, great rate.  Easy, friendly, no hassles.  They do immediately sell your mortgage though, but I've had no issues with any of the entities we've mailed payments to.  In Virginia at least, mortgage lenders have to follow regulations aimed at protecting the consumer.

Cap center is big in Richmond, I don't know that I've ever heard of them elsewhere/out of state.  

Flynlow said:

1988RedT2 said:

I dunno how widespread Cap Center is, but we used them for the re-fi.  No closing costs, great rate.  Easy, friendly, no hassles.  They do immediately sell your mortgage though, but I've had no issues with any of the entities we've mailed payments to.  In Virginia at least, mortgage lenders have to follow regulations aimed at protecting the consumer.

Cap center is big in Richmond, I don't know that I've ever heard of them elsewhere/out of state.  

Yeah, you're probably right.  So maybe I was keeping it small and local without even realizing it.

I was not super happy with my CU-originated mortgage. The officer or whatever was somewhat slow to respond to my questions about the closing costs and didn't really answer my questions. I came very close to switching to a broker who was a friend of a friend and answered all my questions. I will use them next time if there is one. And then the mortgage was sold to US Bank before my first payment was due. Someone else mentioned the US Bank escrow miscalculation, that has happened to me every year since I got the mortgage (2015). This year I started paying extra directly to the escrow along with my extra to the main loan (their payment site allows you to specify).

My mortgage got sold to PennyMac (pennymacusa.com) and I'm pretty happy with them.  Not that I've had to do much with them mind you, but I did have a decent conversation after they bought my mortgage and they said they never sell a mortage that's caught up on payments, good enough for me.  They were also decent to work with when it came time to drop PMI.  So I'd feel comfortable recommending that someone give them a call.

I have next to zero experience since this is my first mortgage (second house).

I shopped around a bit, and ended up using a broker provided by my bank.  Better interest than the 4 others I tried, and since it's all linked to my account it is super hands-off.

My tiny little loan I assumed would be sold off to Freddie or Fannie, but I didn't care since it was all going to still come from the same account.  Kinda concierge service.  They would have handled it all and set up the automatic payments.

In reply to carguy123 :

Are you limited to only working with local clients?  Currently going through this process myself and I could help out a GMer I'd love to chat!