Tag: mortgage broker

Feds Cut Rates But Not Mortgage Rates

Predicting Mortgage Rates

You may have heard that the Federal Reserve has been cutting rates to slow economic slowdown. Industry experts predict that they may cut the Fed rates again this week. It would be a surprise to the economy if they did not follow through with another cut. With this said, it is important to know that this does not mean that mortgage rates will be lowered.

The only mortgage rates that may be tied to the Fed Funds Rates are home equity lines of credit (HELOCs). When it comes to primary 1st mortgages the effects have already taken place. This is because the bond market dictates mortgage rates in real-time whereas the Fed only meets every 6 weeks.

Bond traders use expectations of what the Feds may do when trading bonds which determines mortgage pricing. This is what they have been doing for weeks and weeks up to this point.

“This leaves more potential for mortgage rate increases rather than rate drops. “

Even when it comes to long term rates like mortgages, they do not always follow the Fed Fund Rate trends. Currently, longer term loans are low relative to Fed Funds Rates. This leaves more potential for mortgage rate increases rather than rate drops.

With this being said, borrowers should not focus on the Fed’s cuts/hikes. They should measure if this very moment makes sense to refinance or upgrade to a larger home.  The current mortgage rate volatility makes it nearly impossible to predict if rates are going up or down from here.

Mortgage rates are already near historic lows. If you are interested in a mortgage quote, your preferred mortgage broker, Riverbank Finance would be happy to run the numbers. Call us at 800-555-2098 or request information below!

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Top 3 Myths About Using a Mortgage Broker

Mortgage Broker Myth #1

One of the biggest myths of using a Mortgage Broker is that they do not have control of the underwriting process. Many retail lenders and banks claim this because they have employees that underwrite the file whereas a mortgage broker works directly with the end investor to underwrite the file.

Retailers claim they can go directly to the underwriter and have them clear any unusual conditions however the retail underwriters are typically more cautious because they have to underwrite to the end investor’s standards and sell the mortgage to them after closing. If they make a mistake, the end investor may refuse to purchase the loan.

Local Mortgage Brokers have a choice on which bank or end investor they want to send their loans. If one does a poor job by not clearing the loan quickly, the mortgage broker may choose to no longer do business with them. This forces underwriters to remain accountable and nimble on clearing conditions.

If a retail loan officer at a bank or direct lender is having difficulties clearing the conditions on their loan, they have no other options because they are held captive to their once underwriter which is the only option they have.

Mortgage Broker Myth #2

The second myth about using a mortgage broker is that they take longer than a retail lender or a bank. According to the January 2019 Ellie Mae Mortgage Origination Survey of many major banks and lenders, the average time to close a mortgage is 45 days!

Using a mortgage broker, the average closing time is 21 days which is less than half of the retails and bank lenders. Taking over 30 days to close a loan with a mortgage broker would be uncommon or the result of 3rd party issue.

Mortgage brokers operate more quickly because all they do is mortgage loans. While banks may have other services such as auto loans, credit cards and checking accounts, these are distractions from closing mortgages quickly!

Mortgage Broker Myth #3

The third mortgage broker myth is that mortgage brokers cost more than banks and retail lenders. This could not be further from the truth!

For nearly all loans that mortgage brokers close, there are zero origination fees. This means no underwriting fee, no origination fee and no processing fees. For many banks and lenders these fees could be thousands of dollars that are charged to the clients and add to the cost of buying a home.

Mortgage brokers have access to the lowest rates in the mortgage industry. As a mortgage broker, they receive wholesale rates from the end investors. Generally speaking, mortgage brokers have low overhead and thinner margins which allows them to pass huge savings on to their clients. Lower costs and overhead result in lower than average rates.

Why to Use a Mortgage Broker

With mortgage rates on the rise, consumers are becoming more aware of high rates and fees that are charged by large retail lenders and banks. By simply getting a 2nd quote from a local mortgage broker, a client could save thousands of dollars on the up front costs of their mortgage and tens of thousands of dollars over the life of their loan by getting a lower interest rate.

Mortgage Brokers: Low Rates, No Fees, Quick Closings.

Mortgage brokers are mortgage experts that specialize only in home loans. They work directly with the end investors to close loans quickly and efficiently and pass on low rates and, for most loans, zero lender fees!

To speak with a mortgage broker, give us a call today at 800-555-2098 or request information below!

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Mortgage Bankers vs. Mortgage Lenders vs. Mortgage Brokers

Bankers and Lenders and Brokers, Oh My!

Mortgage Bankers

When many prospective homebuyers think about getting pre-approved for a mortgage, they picture their local bank. They stop by the nearest branch, are greeted by a friendly teller, and ask to speak to a loan officer. There’s nothing inherently wrong with this concept, but it certainly isn’t the only way to obtain a mortgage.

Mortgage Lenders

Mortgage Lenders exist with the sole purpose of originating home mortgages. They do not have checking accounts or ATMs. Generally, they originate the mortgage, but once it closes and funds, they sell it to a mortgage servicer, and use the money to originate new mortgages. Mortgage lenders are also referred to as Direct Lenders or Retail Lenders.

Mortgage Brokers

Mortgage Brokers are basically a financial matchmaker, matching homebuyers to mortgage lenders. They develop relationships with multiple Wholesale Lenders to originate mortgages through the loan programs those lenders offer. Mortgage Brokers take a loan application, then send it to the lender who offers the best rate and terms for that borrower’s financial situation.

Which option is best for you?

Riverbank Finance is a Mortgage Broker, so I’m more than a little biased, but let me explain! Mortgage Brokers are a great option for most borrowers because we have access to more programs and encourage competition amongst our lenders—both of which drive pricing down. We also charge zero origination fees on the majority of our loan programs.

Working with a Mortgage Broker saves borrowers more than just money— it also saves hours of time! We shop our lenders’ rates and fees everyday, and know the program guidelines inside and out. Unlike banks and lenders, we do not add any additional overlays to our lenders program guidelines—their minimums are our minimums, allowing us to serve borrowers that others can’t.

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To apply for a Mortgage, call Riverbank Finance today at 1-800-555-2098.

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Bank or Broker for a HARP Mortgage Refinance?

bank loan officer or mortgage brokerMany people have the misconception that to qualify for the Home Affordable Refinance Program they must contact their current servicer to refinance when they are underwater.  This is not the case.  While your current servicer or bank may be able to offer one option to drop your payment, many times they do not offer the programs necessary to complete a refinance through the HARP program.  After all do they really want you to refinance and lower your interest rate when they directly benefit from keeping you at a high rate?

Not sure what we are talking about, read our previous article: What is HARP?

Many of our clients here at Riverbank Finance have been turned down for the HARP program by their bank or other banks and get discouraged that they will not be able to drop their interest rate and payments to today’s low levels until they call us.  There are many qualification and eligibility factors that are involved in refinancing your home through the government’s Making Home Affordable Program (HARP).

For more information on General HARP eligibility read: HARP Eligibility

These factors include who actually owns your mortgage (it is most likely not the bank that collects your payments), how much your house is worth verses what you owe (Loan-to-Value ratio), if you have mortgage insurance, and of course the other general loan requirements such as how much you make verses what you pay out (Debt-to-Income ratio), credit scores and how much money you have in the bank (assets).

With all these factors that are taken into consideration when determining eligibility for the HARP program the chance that you may qualify with the bank that you are currently at based on their single set of guidelines is very slim.  This is why many people are more successful refinancing their home using a mortgage broker that works with several different banks that have different guidelines that they allow.

Let’s take who owns your mortgage for example.  Most loans are actually owned by the GSE (Government Sponsored Entities) Fannie Mae or Freddie Mac.  They then select a servicer to collect your payments so your payments might be paid to Bank of America, Citi, Wells Fargo, Chase or other large banks.  They collect your payment, keep a percentage for themselves then send the payment to Fannie Mae or Freddie Mac.  If your loan is owned by Freddie Mac and your bank doesn’t offer refinancing for Freddie Mac loans then your loan is denied instantly.

A mortgage broker, however, may have several banks that refinance loans owned by Fannie Mae and also have several banks that refinance loans owned by Freddie Mac.  The variety of options with such a specific program as the Home Affordable Refinance Program is a huge benefit for a homeowner that want to lower their mortgage payments to today’s low rates.

These days, mortgage brokers are a win-win for borrowers.  They offer several refinance programs homeowners and most of the time they are not charged a fee to have the mortgage broker do all of the work.  They may even be able to offer no cost loans which are nearly nonexistent by going through a bank.

To get started on a HARP refinance with a leading Mortgage Broker complete the form below and we will be glad to help you review your eligibility and loan options with you at no cost or call us today at 1-800-555-2098.

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