When choosing where to get your mortgage, you have a lot of options. Among your considerations may be whether to go with a “mortgage lender” or a “mortgage broker”. A mortgage lender makes loans directly to borrowers, while a mortgage broker shops for a lender for their borrowers, who in turn lends directly to borrowers. Twilight Home Loans is powered by Nationwide Loans, which is a mortgage broker. Through our partnership, Twilight Home Loans is able to shop among the many available lenders to find the loan that best meets your needs.
Loan Broker Myths vs Facts
MYTH: Mortgage Lenders Offer Better Rate/Fees Than Mortgage Brokers Fact: The term “broker” is often associated with middlemen and higher costs. In the mortgage industry, that couldn’t be further from the truth. Brokers have access to wholesaler lenders that provide exceptional rates and fees that we are able to pass on to our clients. That said, different brokers and lenders have different business models. You may have heard about the choice to work with a “local lender" or an "online lender”. They both do the same work, they just procure their clients differently. “Local lenders” do the vast majority of their business in the community they live and find clients through referral partners, mainly real estate agents. “Online lenders” source their business mainly through internet advertising and will often work in many states. Online sourcing has proved to be significantly more cost efficient, resulting in better rates/fees for borrowers for the exact same products. At Twilight Home Loans, we believe that the future of mortgage lending is the online model, and we are able to offer rates that are competitive in the online sphere: we are almost always able to match or beat the best offer you can find on BankRate. Try it for yourself and compare your results to what we can offer!
MYTH: Mortgage Lenders Provide Better Service Than Mortgage Brokers Fact: Whether you go with a mortgage broker or a mortgage lender, you will work with a loan originator and a processor, and your loan will be approved by an underwriter. A key difference is where those involved are employed. At a mortgage lender, all three are usually employees of the lender. At a mortgage brokerage, the loan originator and processor do not work for the lender. At Twilight Home Loans, we are most concerned with your interests, not the lender’s. While a loan originator working for a lender may do everything within their power for you, they are ultimately beholden to the interests of their employer.
MYTH: Mortgage Lenders Have Better/Easier Underwriting With “In House” Underwriters Fact: Even though Twilight Home Loans does not employ any underwriters, the underwriters on our files are no less accessible. We have strong relationships with the wholesale lenders we work with to close our loans, they see us as their customer. If they failed to provide exemplary service, we would stop sending them business. The result is that all of our preferred wholesale lending partners provide us with excellent service, and make their underwriters extremely accessible to us. The underwriter on any of our files is just a dial away. Additionally, many lenders have “underwriting overlays”, which are extra rules on top of the standard qualifying guidelines. While the lenders we work with can have overlays as well, if we run into an issue we can find a more amenable lender and move your loan to them – with a mortgage lender, you are either stuck or you have to find a new lender to start over with.
MYTH: Mortgage Lenders Are Faster Than Mortgage Brokers Fact: A loan only moves as fast as those involved. At Twilight Home Loans, our loan originators get your loan submitted to processing day one. The processor will then get your initial disclosure package out within 24hrs. We let you know as soon as they are out, and then the speed is dictated by how soon you are able to sign the disclosures and send in the requested documents. As soon as those are received, we will submit your loan to underwriting within 24hrs. It can’t get much faster than that! In our experience, mortgage lenders can get slowed down by their own bureaucracy. For example, many mortgage lenders have their own “disclosure team” responsible for sending out initial disclosures (which prohibits the loan originator or processor from sending out the disclosures themselves). If the disclosure team gets backed up, all anybody can do is wait, and that could be up to three business days.
MYTH: Mortgage Lenders Have “Portfolio Loans” And Mortgage Brokers Don’t Fact: A “portfolio loan” is a loan that a lender keeps themselves, as opposed to selling it (which happens to the vast majority of loans with any lender). By making a portfolio loan, a mortgage lender takes on all the associated risk. As a result, lenders are very careful when making portfolio loans and have limited options. Mortgage brokers have access to a large network of unique loans that most mortgage lenders don’t have. Twilight Home Loans has a much greater product diversity than most mortgage lenders do.
MYTH: Mortgage Lenders Fund Loans In Their Own Name, And That Is Preferable Fact: Mortgage brokers fund mortgages through the lenders that will actually be servicing the loans (collecting the mortgage payments). Mortgage lenders generally fund in their own name and then sell the servicing elsewhere before you make your first mortgage payment. While some mortgage lenders have their own in-house servicing, this is less common. Mortgage lenders often don't know where they will sell your loan servicing to until after closing, leaving you in the dark until it is too late.