Mortgage brokers have plenty of choices when it comes to running their business, and one of those choices is whether to work for an institution such as a bank, a retail lender, or a credit union, or to become an independent mortgage broker.
Being an independent broker can be an uphill battle, whether it’s dealing with affording up to date technologies in order to scale a business or dealing with any preconceived notions that consumers—or other lending professions—have about mortgage brokers and what they do. In order for anyone to be successful, they may first have to fight some battles about their profession.
Mat Ishbia, president and CEO of United Wholesale Mortgage (UWM) has been a loud and proud supporter of mortgage brokers. He suggests a few ways that mortgage brokers can clearly counter and dispel some of the myths surrounding the broker channel.
Myth 1: Mortgage brokers have less control of the process
Brokers actually have more control than big banks and retail lenders because they have options. Rather than working with a limited set of products, they can choose from a variety of lenders based on the needs of their clients. They also have more control over turn times, and other parts of the process from start to finish. If a particular lender is lagging in their turn times, for example, or otherwise isn’t up to snuff, brokers can take their business elsewhere. The brokers, and therefore the clients, are in control.
“Many wholesale lenders have given brokers access to draw disclosures, closing docs and so much more because brokers crave that control. So thinking that mortgage brokers have less control over the process and their destiny is wrong. It’s actually the opposite,” Ishbia said.
Myth 2: It’s more expensive to go through the middleman
In theory, yes, it’s more expensive the more people are added to a transaction. In the case of working with a mortgage broker, however, it’s not the case. Brokers offer consumers a lower rate and cheaper fees almost every single time because they have access to multiple lenders, Ishbia said.
“Wholesale lenders must offer competitive pricing to compete. They don’t have a captive loan like big banks and retail lenders do. Retail lenders know that if a loan comes to their system, they are getting that loan whether their price is 4.5% or 4.625%, it doesn’t matter. In wholesale, if their rate is 4.625% instead of 4.5%, they don’t have a chance to compete. The loan will go somewhere else. So thinking that it’s more expensive to go to a middleman is just not true.”
Rate is a hard thing to get consumers to overcome, especially as it’s common practice for them to rate shop large lending institutions as the first step in their mortgage journey. Once they are open to having a conversation, however, mortgage brokers can expand the conversation about rate to not just interest, but what that actually looks like on a monthly and weekly basis, and what price looks like for them in the long run.
Myth 3: Brokers have fewer product options
For anyone who actually knows what mortgage brokers do, this myth, that brokers have fewer product options is a pretty easy one to dismiss, although it does still need to be acknowledged.
“Brokers have more products than any retail lender or big bank because they have access to multiple lenders. So if UWM has a unique product, brokers have access to that, just as they have access to Flagstar or Caliber’s unique products. So being a broker gives you more product options, not less, because brokers have access to all lenders,” Ishbia said.
The truth of the matter is, brokers are gaining in market share because the word is getting out, but many people who are familiar with a bank or retail model of business may truly not know that there is another option. Consumers might also think that a loan officer at one of those institutions is the same a mortgage broker.
It all comes down to options, and when working with a mortgage broker, clients have more options overall. Dispelling myths is a hard job, but for independent mortgage brokers operating nationwide, knowing how to strike down common myths is just another part of the job.
Don’t miss Anthony Casa's session “Going Independent in 2019: breaking down the barriers” at the Power Originator Summit in Anaheim, CA on April 4th.