Typically when home owners think of using a broker to refinance their loan they instantly assume there are additional fees and higher interest rates then going directly through the lender. However, this is not usually the case. Veteran homeowners usually will save additional money going with a broker then directly getting a streamline with U.S. Bank or other lenders. Here are four typical questions and concerns military homeowners have when looking to refinance their VA home loan
1. Are brokers typically more expensive than going directly with the lender?
The simple answer is NO. This is a misconception that has existing among home owners for the past several decades. Many lenders, like U.S. Bank, give brokers better deals and interest rates than what they are actually offering. If a veteran walks into U.S. Bank today looking to refinance a VA Loan there is a very good chance the home owner will come out of pocket more money than going with a broker.
2. Do I have more closing fees going through a broker?
The bank will cover the closing costs associated with adding a third party (or broker) in on the loan. So the home owner DOES NOT come out of pocket any additional fees to refinance with a broker. So how does the broker make money? If a broker for U.S. Bank closes a loan, U.S. Bank will give the broker a commission on the refinance. This means the BANK pays for the broker NOT the home owner. Banks are more than happy to give brokers discounts and commissions because ultimately any refinance can be financially beneficial for the bank.
3. Are the interest rates with the direct lender always better?
This is another HUGE misconception associated with refinancing with a broker. In fact, many times the rates are better with a broker then going directly with the lender. Once again, because many brokers close thousands of loans they are given “wholesale” rates which are typically better than the rate through the actual lender. How are they able to do this? Brokers that are converting thousands of dollars of loans qualify for what lenders describe as “wholesale” rates which are much better interest rates then going directly with the lender or the “retail rates”.
4. Is the customer service with a broker significantly worse than a lender?
Lenders like U.S. Bank have multiple functions and refinancing home loans is only a small part of its overall business. VA Home loan brokers are 100% dedicated to helping military families get refinanced and do not carry the load of other business functions. Because of this, brokers are able to dedicate more personnel and time to refinancing a VA home loan then a bank would be able to do. In fact, many brokers specialize in specific types of home loans (Ex. VA, FHA), giving them an unmatched expertise over going directly with a lender. Many loan officers associated with banks have never dealt with a VA home loan and may attempt to steer military homeowners into an inferior loan. Because lenders have multiple functions it is basically impossible for them to dedicate the amount of resources needed to provide better service then a broker.
After analyzing the information, it’s important to realize that lenders like U.S. Bank are not always a bad option to refinance your VA home loan. However, the misconceptions about brokers sometimes blind veteran home owners into worse interest rates and more costs. Knowing the truth behind these four questions can help veteran home owners make an educated decision when deciding to streamline their VA home loan.
As always veterans, make sure to check VA Streamline rates through U.S. Bank, LowVARates.com and other brokers to see which can offer you the best streamline for your situation.
