4% 30 year fixed...

It's official - we've hit 4% 30 yr fixed. I would offer a high balance client 4% 30 yr fixed today...4% has a small rebate, so smaller loan balances probably won't get that offer...yet.

Should you go with a Big Bank or smaller local mortage company

Posted on my blog a few days back was a link to an article regarding Realtors sending prospective buyers to direct lenders versus the big banks. The reason? Time.



I wanted to expand on that previous article and talk about the advantages of using a small or mid-size company versus the drawbacks of not using a big bank.



The simple truth is your loan will most likely end up with a big bank or at least their servicing group. Bank of America currently services several trillion dollars in mortgages. That’s “T” for trillion. But this doesn’t mean going direct to a big bank will provide a quick and painless refinance or purchase money loan. In fact, in many cases, big bank customers will pay a higher rate and fee combination.



Almost all big banks give access to their vast financial resources through intermediaries called correspondent lenders. These are direct lender that fund their own loans and then sell them to a bigger bank. This structure is common and has been in practice for decades.



So it would seem that going to a correspondent lender would increase prices. But it doesn’t, and here is how. The big banks have overhead and huge operations that eat into other division’s profits or losses. Another way to say it is the banks aren’t just in the business of making home loans. Mortgage Bankers and other direct lenders are solely interested in originating loans. The difference is the direct lender is focused on making loans and structures their company to provide the most efficient platforms in which to originate. As a result, turn times, pricing and overall customer service are generally far superior to the bigger bank.



This isn’t to say big banks are always slower or always higher priced. Ultimately your loan officer or mortgage consultant is the best indicator of how well your loan application process will go. But you can’t tell how good or how bad they are until you are deep in the process.



The best way to find a mortgage company is through due diligence and referrals. You can’t beat a trusted family member or friend who has something nice to say about the person or company that completed their transaction. And make sure that person works for a direct lender or small community bank and your service times should be reasonable.



So the top five reasons to NOT use a big bank are:



#1 You’ll be lost in the shuffle when applying. The big bank application volume is amazing since many think the big bank should have lower rates.



#2 Big banks take advantage of their brand and will provide rates that are above the national average



#3 You may not necessarily receive the personal touch with a big bank. Smaller companies are more nimble and better able to adapt to the changing needs of specific client needs. Turn times at some major banks are upwards of 90 days.



#4 Big bank closing times can take 60-90 days. Most purchase contracts are being written under 30-45 day close scenarios. If you can’t close within that time you may suffer per diem penalties for not closing on time. These fees can be anywhere from $75 a day to over $300 per day.



#5 The Big bank don’t care about you. Bank of America now holds a financial relationship with 1out of every 2 people in the country. Do you think they will miss or appreciate your business?

10 Yr Hits 2.80%

In another sign of continuing pressure to keep rates lower and that mortgage production is not keeping with demand the 10 yr hit 2.80 @ 105.0+ !!

You can get a 4.25% 30 yr at no points and probably no fees if the deal is uber-clean and low LTV.