Bank vs. Mortgage lending firm for house purchase

Not the same mortgage situation as you (I did have 20%), but I used Obaid Mohammadi w/ Wells Fargo. In the end, your 'point person' is more important than whether its a bank or credit union or mortgage firm - we were 3-4 weeks from Day 1 to closing, amazingly fast timeline and best rate out there. Worth asking him if he can work with you on the 10%.

https://www.wfhm.com/loans/obaid-mohammadi/about.page

925-457-6994 (Mobile)

We were using a mortgage firm a friend recommended and ultimately did not get approval from them even though we had more then 20% down and were well qualified as well (they wanted us to fix the roof of the house we were buying which we were doing as part of an extensive renovation after we bought it but they wanted us to get a new roof before they would lend us the money). We ended up going directly with our bank and getting a lower rate and I did not find them flakey at all (Chase bank). That being said, no harm in talking to both before making the final decision!

Have you checked with San Francisco Federal Credit union?    They have a program called Poppy Loan that finances up to 100%, no insurance.    https://www.sanfranciscofcu.com/poppyloan 

I haven't used it, but it sounds great.  Your broker is probably speaking to the notion that you have to close fast in order to get a home in berkeley, like within 25 days or something.  Many banks can't close that quickly.  Some people use temporary loans (hard money loans at higher int rate) to close and then put a traditional mortgage on later.   that might do the trick, regardless of using a Poppy loan or your credit union.  ask the bankers if you can do this temp loan strategy.  

Congratulations on starting your homeowners journey.

Realtors want you to use their mortgage brokers who they feel are most able to push loans to close on time.  Realtors are trying to protect their commission, not to get the best mortgage for you.  Feel free to use the bank or mortgage broker that is best for you.  A lower interest rate and no PMI are big deals.  Banks can be a bit slower on the upfront part of getting preapproval, but they make money when a loan closes, so they have an interest in getting it done on time, too.

Good luck house hunting!

We used a Mortgage Broker for getting pre-approved, (he helped remove a ding on our credit) and later for re-finacing the loan for rock bottom rates (she shopped like crazy). The brokers were very helpful as there is a great deal of paperwork, and I did not see any evidence of higher costs or rates. Your worst option is to go to a bank, where they will charge for services and you will not get the best rates. Best of luck and remember to keep your eyes on the goal!

I wouldn't trust a realtor who would guide you to her friends; if you get preapproved, your bank should not be flaky.  You're the one that will be stuck with the higher interest rate for the next 30 years; she and her friends will have their commission and on to the next sale.  I'd do what I can to use the lower interest rate esp if you can use the program that allows for less than 20% down with no PMI.   

Who your lender is definitely a big deal. Big banks have more red tape and can take longer to close. However, the direct lenders are more expensive. I have had good/bad experiences with both. If your bank is local and is familiar with our market and will know how aggressive they have to be, then you may be in good hands. If the name of the officer is locally known, then you might be ok. Ask them which agents they have worked with and then call those agents and find out what their experience was with them. I think your biggest hurdle though, is your downpayment. Because of this market, removing your appraisal contingency is normally a necessary strategy to win and with 10% down there is no way to responsibly lift that contingency. If your agent hasn't told you this, then you need a new agent, one who is more interested in setting you up to win, rather than dragging you through a slog of offers you will never win.  This market is *tough* and you have to be mentally and emotionally prepared - and who you work with is everything. 

Hi. We spent years looking for a house and finally purchased one this past year. We started the pre-approval process with our bank, but my husband is self-employed so that added a challenge to the already challenging market. We ended up working with Jill Friedlander at All Western Mortgage. She is exceptional and got us an excellent mortgage at a great rate. Good luck!

We'd need to know the name of your credit union/bank to be able to say if they are "flaky" (whatever that means) versus the mortgage lending company.  To my understanding, if a lender pre-approves you and the property meets their criteria,  you'll get funding.  I'd suggest looking at online reviews for BOTH, as well as for your realtor.  Plus, ask around. 

Mortgage insurance is a large expense that only benefits the lending institution, not you.  Better to put that money directly towards the mortgage.

It is possible your real estate agent is being truthful, but it is possible she is angling for the referral fee from the mortgage lending company.  You need to ask yourself if she really has your best interests at heart.

We had great experience getting a loan through our credit union--best service ever, a 3 week escrow, and they continue to service the loan. 

Hello, as someone who just recently purchased, I can relate. A lot depends on timing. I’m not sure what your realtor meant by “flaky”, but credit unions can be slow. Initially we were only casually looking and did not have a preapproval letter. However, we found a house we really liked and within our price point. We realized we should’ve done our homework with the preapproval letter, but at the time, this house came up by surprise. We initially went with a mortgage broker, and they turned around a preapproval letter in less than 48 hours. But their rate was high. Still, we bid and our offer was accepted. Keep in mind a preapproval does not bind you to that lender. So we found another lender after we went under contraxt- a bank- willing to lend to us for more than 1% less than the rate the mortgage broker offered us. But actually, we had already been talking to this bank, so their preapproval came just one day later. I don’t recommend this if you have time and don’t have a house in mind yet because the seller side pushed for a 21-day to closing and threatened going with a cash offer if we didn’t meet their deadline. The risk is that  if you cannot meet the timeline and have proof your loan was approved (this is the approval of the actual loan, not the ‘pre-approval’) then the sale basically can’t go through, unless a very rich uncle can come through for you at the 11th hour. This ended up extremely stressful for everyone because no matter who the lender is, they have their preferred timeline of when they can get things in order, verify you, and come up with the money. You need to make sure your lender is comfortable with the timing of the contract so that by closing, the funds are in escrow. Hope that helps. This is a crazy market, but the most important thing is going with what seems right for you and your family. Feel free to PM me if you’d like.

This smells fishy to me. Your realtor wants you to go with a more expensive solution that just so happens to be their “friends”?

It’s possible the concern with your specific credit union proposal or something was entirely valid - I’m sure there are a lot of teaser rate type of things out there - but I would definitely want a neutral second opinion from someone who can get into the weeds/details about your specific situation. Ask the credit union directly about their statistics/reasons for not following through with a mortgage after they preapproved someone.

(We used a bank for our mortgage with no problem but with different circumstances).

I've worked with both. I've found that the mortgage brokers are a lot easier to work with because they're a lot more motivated. You get your docs to them and they shop around and find the best loan for you. If you go to a bank you'll only find out what terms that one bank will offer. When I was working directly with the bank the person who I was working with would do nothing without multiple reminders. She was so slow that the rate lock expired and the bank tried to raise the rate on me. I threw a fit since I had responded to all requests within a day or two and I was appalled that they were trying to penalize me for their own employee's bad performance. The bank did honor the original terms but it still left a very bad taste in my mouth.

Having said that, this all depends on which mortgage firm or bank you're using and who is assigned to process your loan. I had an okay experience with the first mortgage broker, a terrible experience working directly with the bank on a refinance, and a great experience with a second mortgage broker. The second broker was so good that we're working with him again. 

Also, whatever you do, don't agree to a mortgage with an adjustable interest rate. Rates are low now and you want to get a 30 year fixed mortgage. Higher commissions are paid on the adjustable rate loans than the fixed rate loans so you'll probably have one pushed on you. The person will try to show you how much more of a house you could buy with an adjustable rate loan to trick you into getting it. They'll tell you that everyone refinances their loans or moves so it won't matter. But this is how people lost their homes in 2008/2009. Property values went down, mortgage costs went up, people couldn't pay their mortgages or sell their houses. Hold firm. Rates are going up quickly and they're probably going to keep going up under the current administration. As long as you can afford your mortgage payment and don't have to move, it doesn't matter if the value of your house goes down (we were way underwater at one point but kept making our payments and ended up selling our condo for $200,000 more than we paid for it).

Good luck with your purchase! My family members and I bank at credit unions and have never had problems using credit unions for mortgages (in my case, USE Credit Union). You could talk directly to your credit union mortgage person to see if you feel comfortable going that route.

Elisa

Thank you for all responses. Just want to let everybody knows that the credit union is Patelco. My realtor gave me a couple of mortgage firm instead of just one that she initially referred. She liked the first mortgage firm, because she had a good personal experience. We did get preapproval with both, but the second firm is more responsive with their information. The rate that we get is 4.75% with no PMI, but we have to put 15% down, so we have to borrow some from in law or 401 K. With this firm, we can remove loan contingency with 20 days closing. Meanwhile my loan officer at Patelco was not proactive. We just submitted an offer with 2nd mortgage firm, but per my realtor the house will be sold much higher than our offer, so in our offer, we also moved our appraisal contingency.