He considers Fidelity, Schwab and Vanguard to be his "favorite children." Even if he brings forth an occasional gripe.
One of the reasons is that Schwab, along with the others, offers such a breadth of services. Whether you want investing (retirement or taxable), banking (including savings and CDs), a financial advisor or something else, Schwab has it and probably has a very good version of it.
But what about turning to Schwab as a mortgage lender? Is that part of the breadth of Schwab services that Clark approves?
Should I Hire Schwab As My Mortgage Lender for an Out-of-State Condo?
Should I use Schwab as my mortgage lender?
That’s what a Clark Howard podcast listener recently asked.
Asked CJ in Alaska: "I'm thinking of buying a condo out of state. What do you think of using Schwab as a mortgage lender? Any downside?"
Clark calls himself many things. Often through self-deprecating humor. Sometimes he pokes fun at himself for being cheap with a certain pride. Other times he labels himself “the man from Roth.”
However, he could just as easily call himself the “king of comparison shopping.” It’s against his financial ethos to make a major purchase without comparing options. He’ll go to extreme lengths to make sure he’s picking the best available choice, even if it’s just to save a few bucks on a shirt or hotel room.
But when it comes to housing, which for most people is the largest purchase you’ll ever make, picking a single potential mortgage lender without aggressively comparing is almost heresy.
“When people are buying a home, most people only get a quote from a single mortgage lender. And that’s to your detriment. Because shopping around will definitely pay,” Clark says.
“Get a quote from Schwab on doing a loan on that purchase. And then get quotes from lenders in the out-of-state area where you’re buying the home.”
You can leverage the price quotes you get. For example, if Schwab gives you a half-point better on the interest rate, you may be able to take that to the local real estate lenders and get them to match on price.
Either way, information is power — especially when every bit of interest percentage matters when you’re talking about a purchase typically in the hundreds of thousands of dollars.
Plus, with current market conditions, real estate lenders are more apt to be competitive on rates.
“Right now, mortgage brokers, they’re twiddling their thumbs,” Clark says. “The housing market has slowed down so much that they need your business. And so they’re willing to cut margins to get your business. And that’s why you put mortgage lenders in competition with each other.”
Schwab vs. Local Mortgage Lenders
Christa, the producer on Clark’s podcast, has used Schwab as a mortgage lender.
Clark mentioned that Christa got a quarter-point discount on her mortgage rate by being a Charles Schwab account holder.
“Using Schwab as a mortgage lender is something that has worked well for Schwab account holders. Schwab in the mortgage area has had a good reputation and again, you do have a good shot that the costs would be lower,” Clark says.
“I don’t recall ever hearing complaints about using Schwab as a mortgage lender.”
Schwab is a national brand. Huge national companies win by doing high volume. And that’s one of the reasons they’re able to offer low rates, especially for those who invest through Schwab.
However, Clark highly values local knowledge when it comes to real estate. So although he thinks Schwab is a fine choice, it’s not what he prefers, all things being equal.
“I do have a preference when you’re buying real estate to use a local mortgage lender just because they’re more aware of what goes on in the area. They’re more accountable to you,” Clark says.
Final Thoughts
Schwab is a Clark-approved mortgage lender. However, he cautions against locking on a single lender without comparison shopping — and perhaps even leveraging the best offers against each other.
Also, Clark prefers to deal with local real estate agents and lenders who are experts on the neighborhood(s) where you’re looking to purchase. Especially if the area isn’t as familiar to you.
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