Sacramento Real Estate Voice received an email question from a prospective home buyer and Gena has a tip for new home buyers and homeowners, below.
Home Buyer Asks Realtor:
I am a new home buyer in Sacramento and I have a question. What is the difference between going to the bank and going to a mortgage broker for a loan? Does it cost me more money? Which one is best? Who pays for the appraisal? Do I really need an appraisal?
First Time home buyer
Dear Future Home Buyer,
Congratulations on being a First Time Home Buyer. This is a fantastic opportunity for you to buy low in this real estate market.
In my opinion there is a big difference between just getting a loan at a bank and having a Mortgage Broker look for the best loan for you. A Mortgage Loan Broker is licensed and continues their education. They have been checked for felonies and keep up with all the best loans and new loan requirements. A Mortgage Broker seeks the best loan program for you from all the banks and other sources, not just one place. No one works for free so yes there are costs associated with any loan whether its a bank or a Mortgage Broker. However, the Mortgage Broker is typically paid by the source where the loan will derive from. Appraisals are paid for by the home buyer and are required anytime a home buyer obtains a loan. The bank wants to make sure that the money they loan you for a mortgage loan is a safe bet just in case you should default.
Whereas, the person at the bank is not necessarily licensed but works under the license of a Broker at the bank. The bank personnel only deal with what their bank promotes in terms of loan programs. As you can see, it may be a great deal but then again it may not. The bank also charges one way or another for the appraisal.
Usually, when you are working with a professional full time Realtor, they will be able to recommend a good Mortgage Broker for you that they have worked with in the past. No, Realtor do not get kick-backs from Mortgage Brokers. What they do get is a happy home buyer who has an excellent mortgage loan tailored to their specific needs and a smooth transaction that closes. This is what we call a win, win for everyone.
It is important to use someone local for your mortgage and the reason for that is that local Mortgage Brokers will make sure that all the costs associated with a house are included in the payment. I have seen where an outside Lender was used and when all was said and done, at the closing, suddenly the house payment went up considerably. This is something you want to avoid at all cost. Those types of surprises, no one needs.
Enjoy the process of your home buying and again, congratulations on taking that first step!
Home Buyer Tip: Be sure to ask for a “Good Faith Estimate” from the bank and or the Mortgage Broker. This will show you a breakdown of all the costs associated with your home loan. You are entitled to this by law, so be sure and ask for it. You are also entitled to a copy of the home appraisal, so make sure you ask for that, too.
Homeowner Tip: Did you know that a smoke detector only has a life of 10 years? Yes, whether it is wired into your home or not. The fire department recommends that you replace your smoke detectors every 10 years. When purchasing a new home or condo make sure that you replace all the smoke detectors with new ones when you have your home or condo re-keyed.
If you have a real estate question that you would like an answer to, be sure to check out and read what other home buyers and home sellers have asked and feel free to ask your Real Estate question by email. Perhaps, your question will be part of the next article featured on Sacramento REAL Estate Voice.
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