A continuing series of this blog will be interviews with experts from all related fields. Topics will include insurance, tax, law, appraisals, engineering inspections, will, deeds, corporate entities and on and on. The format will be a simple 10 questions and answers. I will commit to doing an interview at a minimum of every two weeks.

My first guest will be…. myself. Don’t think I am a weirdo…..I just want to try out the format…….

1. What is the definition of a Mortgage Broker?

A mortgage broker is a third party who works with a borrower to obtain a mortgage from a direct lender. The broker is simply an agent for various lenders and does not lend out their own money.

2. What is the difference between a mortgage banker and mortgage broker?

Simply put: nothing. A Mortgage Banker does have the opportunity to close a loan and fund in its own name. However, the loan is typically pre-sold to a direct lender prior to the closing. A mortgage banker will make statements such as it is their money so they make the final underwriting decision, can lower the rate and waive fees. Not true. These are simple marketing tools to make borrowers think that they are an actual bank.

3. How does a mortgage broker/banker get paid for their services? Will it affect the interest rate?

The lender which ultimately funds the loan pays the broker/banker what is called a “Yield Spread Premium”. It is a fee by the lender for finding the borrower, doing all of the work on the application and bringing it to closing. The higher the interest rate the borrower gets, the higher the premium paid to the broker.

4. Why would one go to a broker instead of directly to a bank?

In the old days, people only went to mortgage brokers if there was an issue and the loan needed “massaging”. Today over 65% of all loans are obtained through brokers. I think it is because people are very busy and they need someone they can trust to get them through the maze of the mortgage process.

5. How do I find a good mortgage broker?

Do not go online and be sucked into free credit report or free pre-approval sites. They are lead generating companies. Do not use a company from Wisconsin to do a New York loan. Do not use your cousin. Get a referral from an attorney, realtor or colleague. Interview a few people until it feels right. You will know.

6. What are things I need to ask before going with a particular person?

I tell my seminar students to ask the loan officer how long they have been in the industry, how long have they been with their current employer, how they can be reached and what is the lock in process. Most importantly, you want to explain your particular transaction to them to make sure that they are experienced in what you need. Not every loan officer can do a coop loan, new condo construction or investor properties. You should speak to a few different loan officers and compare notes. You will know what feels right for you. Think of it as a first date and ask yourself if you want to go on a second date.

7. Why are some broker’s rates and fees very different from others’?

Everybody’s rate should be about the same within ¼ of a percent. Everybody’s fees should be the same within a few hundred dollars. Remember, we are all going to the same places for the loans so why would one guy be able to get a full percentage point lower than everybody else……

8. Is there a fee to lock in my rate?

20 years ago, there was a lock in fee. Now, banks do not charge to lock in a loan so there should be no

9. How long does the entire process take?

With technology speeding everything up, it could take as little as 2 days to get a commitment letter. However you still need an appraisal, title report, insurance and lots of other people and stuff to close. I would say the average purchase is around 30 to 60 days and the average refinance is about 30 days. Of course if you are in a rush, miracles can happen.

10. When should I find a loan officer?

If you are thinking about purchasing a home in the next few months, I would interview and know who my professionals will be. You will need an attorney, realtor, insurance agent and loan officer. It is good to have these people waiting in the wings. Once things get rolling, it can become very confusing and fast.

One more question: How was it interviewing yourself?

A little weird. I do have control issues, so it was probably best I do this myself.

New week: I will interview a title closer, Jody Fay of Attorney’s Title Company in New York, who will tell you everything you need about title insurance and what to expect to pay.

Have an idea for a good topic you want to know more about? Let me know and we will put it on the schedule.