Re: Broker vs. Banker - Posted by Ed Garcia
Posted by Ed Garcia on March 23, 2006 at 10:09:36:
Both of these lenders fulfill a need in the lending community.
MORTGAGE BROKERS, do not use their own money; they make the loan and sell it on the secondary market using matrix and credit scores as their guidelines.
Their best use is LONG TERM financing. They?re good for niche programs such as, easy docs, lite docs, no docs, stated income etc, which are programs that don?t verify income. As I said this lender is best for long term financing and for an investor who is building a portfolio and is holding.
This is the lender that most REI utilize and think they?re a catch all lender which they?re not. Once the investor gets a half a dozen loans under their belt they do what we call hit the wall and financing becomes more difficult.
BANKS, make loans to people and then collateralize them. They are portfolio lenders, meaning they make the loan and keep it and have more flexibility meaning that they can tailor a loan to the individuals needs.
Their best use is SHORT TERM financing. They are an outstanding source for flippers, and are more competitive on pricing for short term financing. The average person who goes to this lender will be quoted 80% of appraised value or purchase price which is ever lower. I teach my students how to get credit lines to do multiple deals at 100% financing and get fix-up money from this lender.
The key is, knowing how to fully utilize both of these lenders. Both lenders will attempt to do the deal in the lenders bust interest. You need to know how to get these lenders to do the deal in your best interest.