Nebraska Mortgage Lenders, how to pick the one for you

Picking the right mortgage lender in Nebraska

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There are three types of mortgage lending “channels”. Each one has unique features that will be a pro or a con for each unique buyer. I go over the advantages and disadvantages of each one.

A home buyer has to consider not only what mortgage programs are available, but how they want to get their mortgage. The three mortgage channels are bank, retail, and broker. In my 17 years as a mortgage lender I have worked at all three so I have inside knowledge about the pros and cons for every option.*

*I started my career as a broker for 5 years. I moved over to a large national bank for 3 years. I moved back to broker for 6 years and finally to retail for 3 years. Finally, I opened my own independent mortgage broker shop ‘Petrovich Team Home Loan’! Real estate can be a volatile industry especially between 2007 and 2011.

Getting your mortgage from a bank

A lot of buyers think their bank is the only place to get a mortgage. Many buyers that are referred to me say they had no idea they had options outside their bank to get home financing.

Advantages of a bank for your mortgage

One stop shop for all your financing
Often services your loan so it is not sold off
Might offer discounts to current customers

A bank is a one stop shop for all your financial needs. You can open a checking account, get a car loan, or get your mortgage. The larger banks (Bank of America, Wells Fargo, Bank of the West) will also service your loan. That means you will make your payment to them rather than have it sold off to another lender. For some buyers having their mortgage at the same place they bank is a convenient advantage. If it is a larger bank that services your mortgage, you can walk into your bank and take of all your finances in one place. If the bank has local branches you can walk in and talk with someone about your mortgage, which is another advantage. However, your smaller local bank will not service the loan. It will be sold off and your local banker will have less access to your account than you do. Many banks will offer discounts on fees for current bank customers.

Disadvantages of a bank for your mortgage

Mortgages are a small part of a banks business…And small importance
Banks make little on the mortgage compared to other bank products
Banks only want your mortgage to sell you other more profitable products

For a bank, mortgage financing is just a small part of what they do. In fact, home loans are just a sliver of a banks profits. Most of the banks money comes from unsecured loans, credit cards, and auto loans. From my experience working at a large, I can tell you something no one else will – the bank does not want to do your mortgage.

The larger banks make very little money on your mortgage. For them, the mortgage is just a way to offer you other products like a credit card, car loan, or line of credit. The mortgage lender is just there to provide the service to current customers so they do not leave and go to another bank. What does them mean for you? It means that the mortgage department of your bank is often an afterthought. This creates a more stressful home buying process and often they are offering higher than market rates to limit the number of mortgages coming in to their mortgage department. Most are just betting that you do not know mortgages are available outside the bank.

Harsh I know. But that was my experience and the experience of others in our local market that worked at a bank.

Getting your mortgage from a retail lender

A Retail lender is similar to a bank. In fact, it is a bank that is only licensed to do mortgages. When I worked in Retail this is exactly how I would explain it. We were a large bank but we only did mortgages. No auto loans or credit cards or checking accounts. There are many very large retail lenders (Quicken Loans is the most well known).

Advantages of retail for your mortgage

Retail lenders, like banks, often service their loans
Retail lenders only do mortgages. It is their priority
Retail usually has better processes than banks

Just like a large bank, many of the retail lenders also service their mortgages. That means you will make your payment to the same place that did your loan. Unlike the large banks, there is no branch to walk into and discuss your current mortgage. An advantage of retail over the bank is usually a better process. Because they only do mortgages, retail lenders put all their efforts into the mortgage process. Also, unlike large banks, retail lenders want to do your mortgage (it is their only business) so there is a bit more focus on better processes and customer service.

Disadvantages of retail for your mortgage

Retail lenders are national, not local. They don’t know the market
Retail lenders, like big banks, are big corporate behemoths with slow process
Rates can often be higher at a retail lender

A disadvantage of retail is, just like large banks, they are large national companies. Real estate is very local and that can cause problems when working with a large national company. They will have processes and ways of doing things that have to work for every state and area. For me personally, this caused a lot of frustration in the process. Home lending is a very regulated industry. Large companies have to put systems in place to make sure all their sales and operations staff stay compliant. A necessary measure for a large company, but it does slow down the process as you wait for your loan to work its way through the process. In my opinion, most retail lenders also have slightly higher rates. They are usually a bit higher than a bank because they do not have other higher profit channels.

Getting your mortgage from a local mortgage broker

This is my channel. A mortgage broker is a company that connects you with an investor to do your mortgage. You work with brokers every day. Wal-Mart is a broker. They connect you with products made by other companies. You can choose to buy these products directly from the manufacturer in most cases or go to Wal-Mart as the broker. As a local professional broker, I choose who to work with from thousands of unique mortgage investors. When you come in for a mortgage I look at your unique situation and pick the best investor for you.

I am going to give my honest advantages and disadvantages of a mortgage broker and then let you know why I finally decided to open my own mortgage broker shop. I am also going to dis-spell some myths about mortgage brokers.

Advantages of getting your mortgage from a local mortgage broker

Mortgage brokers are local and involved in your community
Brokers are faster at closing loans than banks or retail
Mortgage brokers have lots of investors and banks to work with

A Mortgage brokers has flexibility. I do not just work for one bank or one retail lender. I have many investors I work with and many more calling to see if I will work with them. Some mortgage investors are very good at one scenario but not another. I have investors that have fantastic rates but are a little slow to process your loan. I have investors that have great but not the best rates, but are lightning fast on process. If you need to close quickly this is great to have. I can have an investor for every scenario.

As a local mortgage broker, I can structure my business in a way that best fits my local market. As a local lender, I know much better than a national company how to best service my local community and clients. Because I am a small local company I can also quickly adjust my business as the real estate market fluctuates.

I have more control of my operations than a large bank or retailer. It is a myth that brokers have no control of the loan process. Remember there are thousands of mortgage investors competing for my business. If one of them does not provide amazing service and communication, I will take my business elsewhere. When I worked at a bank and retail I just had to put up with the clunky parts of the process. I had to just apologize to clients when our operations staff got overwhelmed or slowed down. Now I just pick up my ball and go home. Just like you are my customer, I am the investors customer. Okay, I hope that was a somewhat unbiased opinion of a mortgage broker.

Disadvantages getting your mortgage from a local mortgage broker

Broker flexibility can be bad if you are working with an inexperienced broker
Some broker’s investors service their loans, but many sell them off
You need an experienced broker to have an amazing broker experience

Some of the advantages of a mortgage broker can also be disadvantages. Mortgage brokers have a lot of room to structure their business exactly how they want it to run. Great if you have a great broker, but if you get a broker who is not so great the mortgage process issues can be amplified. Banks and retail lenders have many checks and balances in place that slow down the process, but it also prevents “not so great” loan officers from making huge mistakes. The investors brokers work with have checks as well, but the broker has a lot more flexibility in the process on their end. This can create speed and efficiency with a great broker and create chaos with a not so great broker.

It is my honest opinion that the best way to get a mortgage is through an experienced local mortgage broker. The efficiency of running a local business means great rates. The flexibility a broker has means you will get a great local experience from a great local mortgage broker.

Myths about mortgage brokers

Prior to the 2008 housing market crash, mortgage brokers were on every corner (70% of mortgages were done by a broker). Becoming a broker was easy and closing loans was easy. This meant that a lot of bad actors got into the broker market. I could write a book about the Wild West days of pre-2008. The entire industry has been cleaned up and nearly all of those bad actors and “used car salesman” have been run out of the business. I often tell people that prior to 2008 I felt like I did not belong in the mortgage industry, but since then it has changed to a business I feel comfortable working in.

After the 2008 crash mortgage brokers all but disappeared. In the last few years however they have had tremendous growth. Mortgage brokers are almost 20% of the mortgage market and growing. I went back to being a mortgage broker because it was the best channel for me to provide flexibility, great rates, and fast service to home buyers. I have access to three of the top ten mortgage lenders in the US as well as many niche lenders.

Mortgage brokers have no control over the loan process

This is a “con” I read about on many industry sites. Mortgage brokers can shop for the best investor, but once they send it off to an investor they have no control over the loan process. As someone that went from broker, to bank, to broker, to retail, to broker I can tell you the most control I had hands down was as a broker. With the large retail lender and bank I had to go through a mountain of middle men. Sales managers, area managers, operations managers, etc. The honest truth is I always felt like each one was just trying to pass off any question or problem I had to another person. As a broker I was able to call my underwriter directly before I submitted a loan and during the loan process. I was able to ask questions directly to the underwriter before I sent in a file.

And if an investor is not providing me with the level of control and communication I need I stop using them and find someone who will. That is not an option with bank and retail.

Mortgage brokers do not help clients once the loan is closed

This is more of a individual loan officer problem. A good loan officer will become your mortgage consultant after the closing. A bad loan officer will not take your call as soon as they are paid. But a myth of mortgage brokers is they do not stay in touch with their past clients. Back in the old days a broker would close a loan and the investor would take that client from the broker and market to them directly. In today’s broker world, there are investor partners who work with the broker to provide an amazing post close experience to our client. We only work with investors that treat the broker as a partner in servicing client’s needs after closing.

Truth about mortgage brokers

Better rates and fees

First, I have better rates than banks or retail lenders. Banks and retail lenders have area managers, regional managers, vice presidents, marketing departments, IT staff, and on and on. These are all paid for through your rate. As a local mortgage broker, I am a small business working in my local Nebraska community. I monitor my overhead and keep my cost low so I can offer great rates without sacrificing personal service. You will talk to me from start to finish, not my assistant or support staff.

Brokers are hyper local

Second, I am in the local community. The people I work with I see out at the grocery store and restaurants and that creates a huge incentive to provide amazing service. My business succeeds or fails based on the opinion of the families I help. I work with just a few clients every month, not the 100s of millions in loans done by banks and national retail lenders.

Brokers are small businesses that can quickly shift as the market shift

Finally, the fact that I am small allows me to shift my business as the market shifts. Real estate is an up and down market. Probably more so than any other industry, there are great years and down years. I can adjust how I work based on the market. I can change investors quickly to offer products that fit the current real estate environment.

My goal is to be the local mortgage expert serving Papillion, Omaha, La Vista, and Bellevue. – Michael Petrovich

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