As I meet new customers many times I get into conversations regarding the structure of my company, comparisons to Big Box Banks and many times they think I'm a broker. There are 3 basic structures of mortgage companies that can affect your total payments on your new mortgage for the life of the loan.
I've heard many times, "tell me about your company I've never heard of RMG." Many clients are more familiar of Big Box Lenders because they are on tv, radio, news print but I'd also like to explain the differences between 3 basic structures so you can choose the structure that works best for you.
Big Box- I won't name them you know who they are. I spent 14 years as a mid level sales manager with a Top 20 Big Box. Layers of management on salaries, brick and mortar, advertising, call centers, centralized underwriting and processing. Rates tend to be higher to pay for all of the above. If that Big Box is in the market to increase volume their pricing may be good. If they are swamped with refinance business and the market is heavy in volume,they increase rates to slow down the faucet. You become one of many, many files and the processing and underwriting groups may not have a sense of urgency on every file. Service tends to suffer. Typically these Big Box Lenders are well known and customers feel more comfortable because it's a familiar name and there may be a banking relationship.
Broker- Through the years mortgage brokerages became another option because banks dominated the mortgage market, controlling it and the prices. Mortgage brokers have relationships with multiple banks and can shop your loan to lock with a lender that is in the market to gain business and also find lenders that specialize in loans such as Jumbo, Renovation, or First Time Home Buyer loans. The broker's advantage is that they will typically find better rates, terms of products and variations of products. The disadvantage is that the broker has no skin in the game. They have no control of your file. They lock the loan, send it to the lender to be underwritten, etc. If the lender they lock your loan with is busy with other files the brokers doesn't have the ability to push the loan any quicker through the process. Brokers use the lenders underwriting, closing dept, and also the lender's funds to close your loan. No control, but better pricing.
Bankers- RMG! We have relationships with multiple lenders like a broker but where we differ is that as a banker we use our money from our Bank, Alerus Financial. We underwrite, process, and use our loan closing department assuring total control. To the customer we can offer the most competitive rates and also be in total control of the file. If a loan needs to close in 10 days, we close in 10 days because my entire support group is in Minnetonka. Bankers give you better pricing and better control.
Customers also need to understand that a high percentage of conforming (non FHA/VA) loans are sold to the secondary market, Fannie Mae and Freddie Mac. All lenders will sell a high percentage of their loans. The Big Box will keep the servicing rights, that is collect payments but they typically sell the loans to Fannie and Freddie. I've heard clients tell me in an initial meeting, "Big Box doesn't sell their loans." That's not always true and in the end it really won't matter because the terms of your loan will never change.
If you are in the process of shopping for a mortgage make sure to find a company whose structure will benefit you best. RMG is a local Minnesota company. We use our money, our support staff, and we have no layers of management. I meet you face to face, fully consult your specific needs and find a program that works for you and is priced right. Contact Brian Parkinson at 612-282-5863
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