In today’s Denver CO Mortgage Tip, I want to further explain the difference between a Loan Officer from a Bank/Credit Union and Colorado Mortgage Brokers.   Yesterday I addressed Compensation and Loan Programs and how they can impact your next Denver mortgage or Colorado home loan. 

Before I get started, I want to restate the definitions for “Bank” and “Mortgage Broker”.  When I say “Bank”; I’m referring to any lending institution where you can walk in to get your Denver Colorado mortgage.  Examples would be Wells Fargo, Chase, etc.  On the other hand, Colorado Mortgage Brokers are individuals/firms that act an individual agent for the borrower and the lender.  I am a Denver Colorado Mortgage Broker.

Interest Rates:

Banks Usually Have Higher Rates:  Banks have large overhead expenses.  They have to build, maintain, and make loan payments on their own “Brick and Mortar” buildings.  This is very expensive.  Additionally, banks have to pay high utility bills, costly computer/information system, salaries for their employees, health care benefits and 401K plans, etc.  You’re getting the idea.  Banks have to pay this overhead every month so they start off in the “Red” each month.  The way for them to stay afloat is to make money by charging higher interests on Denver mortgages and Colorado home loans.  You already know how they nickel and dime you for their normal bank fees such as check return, ATM, insufficient funds charge, etc.  What’s funny is that they do all the TV commercials exposing all the “Other” Banks little tricks, but they do them as well. They pay big bucks on advertising and marketing to get their customers.  Unfortunately for you, when you get a higher interest rate on your Denver CO mortgage or Colorado home loan, you will pay tens of thousands of dollars more than you should over the life of your Denver home loan.

Colorado Mortgage Brokers Usually Have Lower Rates:  Most of the Denver Colorado Mortgage Brokers I know work from home.  I do.  We have very little overhead so unlike the Big Banks, Denver CO Mortgage Brokers don’t start off each month in the hole.  Now you can understand why we can provide lower interest rates on your Denver mortgage or Colorado home loan.  The Banks also don’t want you to know is that they depend upon us to help them stay in business. Since Banks don’t pay us a salary or any of our costs that are associated with bringing them a Denver mortgage or Colorado home loan, they pay us a yield spread premium (YSP).   I will talk about YSP in another post.  The bottom line is as a Denver Colorado Mortgage Broker, I will usually beat a Bank home loan interest rate by .25%.  Again over the life of the loan, that is lot money that you can save on your Denver home loan.   

 Qualifications:

Banks Have Their Own Standards.  When you go into a bank or credit union, the facility looks great and their employees are dressed very nicely.  Male employees are usually wearing a suit or the bare minimum a shirt and tie, right?  It all looks very professional.  The old saying that looks may be deceiving could be applicable here.  Banks can hire anyone that they want to be a Loan Officer.  They are responsible for training them.  Let me ask you a simple question about your own employment experiences when you got a new job.  How much training did you actually get?  Were your employers more interested in you jumping into your duties so you could start contributing to the bottom line of the company?  I believe that Banks are no different.   Also Banks, like most other businesses, will usually pay the least amount that they get away to get the job done.  My first job in the Denver mortgage and Colorado home loan industry, I was paid about $350 per loan.  It wasn’t a Bank, but the practice/concept is the same.  I soon realized that the lender was usually making $5,000+.  As I did my own research, I discovered that the lender was significantly overcharging their customers for their Denver mortgage or Colorado home loan.  I quickly resigned because I wouldn’t take advantage of people plus I wasn’t going to be used. 

Colorado Mortgage Brokers Have to Adhere to Higher Standards:  Colorado Mortgage Brokers had to become licensed almost two years ago in order to originate a Colorado home loan.  Bank/Credit Union Loan Officers don’t have to be licensed!  As a Denver CO Mortgage Broker, I had to: 

Be Fingerprinted

Pass a Background check by the Colorado Bureau Investigation

Secure a Surety Bond for Mortgage Broker for $25,000

Carry errors and omissions insurance for $300,000

Participate in 40 hours of education:  

•  
  1. A minimum of  19.5 hours in Federal and State Law
  2. A minimum of  16 hours in Mortgage 101
  3. A minimum of  4.5 hours in Business and Trade Practices

Pass a comprehensive two-part written Colorado Mortgage Licensing Exam

Adhere to Colorado Mortgage Broker current licensing requirements. 

If you go back to one of my first posts that talks about DORA, you will see that it isn’t easy to join the elite status of Colorado Mortgage Brokers.  That is why DORA inactivated 4,560 licenses in August.  Most people can’t meet these high requirements.  Again, Loan Officers haven’t had to go through this stringent licensing process.   Unfortunately they will also be exempt from most of the requirements of the SAFE National Mortgage Licensing Requirements that are effective in 2010.  I’ll address this in another post because you need to know these vital facts.  

One of my best referral sources as a Denver CO Mortgage Broker is the Banks.  When borrowers go to the Bank and they realize that the Loan Officer (a lot of times a young kid) didn’t have the foggiest idea of what he/she was doing or they didn’t have the loan program that they wanted, they called me. 

I bet the next time when you go into a Bank; you will look at their Loan Officers in a different light. The reason for these posts is that I not only want you to get the “Right” Denver Mortgage or Colorado home loan but also a “Good” one.

The next Denver CO 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 Denver mortgage or Colorado home loan.