Colorado Springs Mortgage Tip: Should You Get Your Colorado Home Loan from a Bank or a Mortgage Broker? (Cont)

For today’s Colorado Springs Mortgage Tip, I want to continue to explain the difference between a Loan Officer from a Bank and Colorado Mortgage Brokers.   In my last post, I explained how Compensation and Loan Programs could impact your next mortgage Colorado Springs CO or Colorado home loan. 

To recap the definitions, when I’m referring to a Bank it is any lending institution where you can get your Colorado home loan.  Some examples would be Chase, Wells Fargo, your local Credit Union, etc.   Colorado Mortgage Brokers are individuals/firms who act as an individual agent for the borrower and the lender.  I’m a Colorado Mortgage Broker. 

Interest Rates:

Banks Usually Have Higher Rates:  As you would expect, banks have large overhead expenses.  They not only have to build, maintain, and make loan payments on their own “Brick and Mortar” buildings, but there a lot of other overhead expenses.  This includes but is not limited to high utility bills, expensive computer/information system, salaries for their employees, health care benefits and 401K plans, etc.  You know that health care benefits and retirement plans are very costly for employers.  Banks have to pay this overhead every month so they start off in the “Red” each month.  One of the ways for them to stay in business is to make money by charging higher interests on Colorado Springs mortgages and Colorado home loans.  You’re already very familiar with all the nickel and dime fees they charge such for ATM, insufficient funds charge, etc.  Banks also spend a lot of money advertising and marketing to get and retain their customers.  The banking industry is very competitive for your mortgage Colorado Springs CO.  Whenever a bank charges you a higher interest rate on your Colorado Springs mortgage or Colorado home loan, you will end up paying tens of thousands of dollars more than you should over the life of your Colorado Springs home loan.

Colorado Mortgage Brokers Usually Have Lower Rates:  Most of the Colorado Springs Mortgage Brokers I know work from home.  I do as well not only for keeping overhead low, but because of the life style that I mentioned yesterday.  Unlike Banks, Colorado Mortgage Brokers don’t start off each month in the red.  You should be able to see why we can provide lower interest rates on your mortgage Colorado Springs CO or Colorado home loan.  Banks also don’t want you to know that they rely upon us to keep them in business. Banks don’t pay Colorado Mortgage Brokers a salary so there is no cost to them when we bring them a Colorado Springs mortgage or a Colorado home loan.  They do pay us a yield spread premium (YSP).  I will talk about YSP in another post because it is important for you to understand.  The bottom line is as a Colorado Mortgage Broker, I can usually give my clients an interest rate that is at least .125% to .25% lower than a Bank. This is a lot money that you can save on your Colorado Springs mortgage over the life of the loan.  

Qualifications:

Banks Set Their Own Standards.  Whenever you go into a bank, the facility looks great.  All their employees are all dressed up.  They all look very professional, right?  Looks can be deceiving.  Banks can hire anyone to become a Loan Officer.  They are also responsible for training them.   Let me ask you a question.  When you got a new job, how much training did you actually get?  Was the training minimal and were you left primarily on your own to learn your new job?  Why would think that Banks are any different?   Banks, like other businesses, will usually pay the least amount that they get away to get the job done.  My first job in the mortgage Colorado Springs CO area and in the Colorado home loan business, I was paid about $350 per loan.  Although it wasn’t a Bank, the concept is the same.  I quickly realized that the lender was significantly overcharging their customers for their Colorado Springs mortgage or Colorado home loan.  That lender probably was making about $5,000 per mortgage Colorado Springs CO.  I promptly resigned because I wouldn’t take advantage of people.  I found out that there was a lot of Colorado Springs mortgage fraud out there in the Colorado home loan market.

Colorado Mortgage Brokers Have to Adhere to Higher Standards:  Colorado Mortgage Brokers had to become licensed two years ago in order to originate a Colorado home loan.  Bank or Credit Union Loan Officers don’t have to be licensed!  As with all the other Colorado Mortgage Brokers, I had to:

• Be Finger printed and have a background check by the Colorado Bureau Investigation
• Have a Surety Bond for Mortgage Broker for $25,000 and Carry errors and omissions insurance for $300,000
• Participate in 40 hours of education which included Federal and State Law, Mortgage 101, and Business and Trade Practices
• Pass a very comprehensive written Colorado Mortgage Licensing Exam
• Practice and adhere to the Colorado Mortgage Broker current licensing requirements. 

Go back to one of my first posts about DORA and you will see that it isn’t easy to achieve the elite status of Colorado Mortgage Brokers.  Remember that DORA inactivated 4,560 licenses in August.  It isn’t easy to meet their strict licensing requirements.  Banks or Credit Unions can hire ANYONE off the street without any credentials or qualifications to work for them.   Why do you think so many of their Loan Officers look young enough to be your kid?   Cheap labor maybe?

One of my best referral sources as a Colorado Springs Mortgage Broker is the Banks.  When people go to a Bank or Credit Union and they realize that the Loan Officer doesn’t have the foggiest idea of what he/she was doing, I get a call for help.

The reason for these posts is that I not only want you to get the “Right” Colorado Springs mortgage or Colorado home loan but also a “Good” one.  You need and deserve professional advice. 

The next Colorado Springs Mortgage Tip will be a brief summary of these four major differences because they are extremely important when you start selecting who will help you with your mortgage Colorado Springs CO or Colorado home loan.