Choosing a mortgage broker before you shop for financing
How to Choose a Mortgage Broker
by Jonathan Cochran
Preparing to Buy Your First Home
Should You Refinance Your Home?
The Economics of Buying a Home
Purchasing a house these days can be like navigating a war zone if you're not adequately prepared. A mortgage broker is supposed to be your champion, connecting you with the right lenders who can get you the best loan. Many people say that the role of mortgage brokers has changed in the past few years, since the struggles of the housing industry have created less variety in the types of mortgages available. But choosing a mortgage broker can still be incredibly important, especially if you view property as a long-term investment. Their access to different lenders is far beyond what you can achieve on your own, and they can make a significant difference in the way someone with slightly tarnished credit negotiates a home loan. The important thing is simply finding one you can trust.
1. Research the Broker's Reputation
The quickest and easiest way to find a reputable mortgage broker is to ask people you know and trust who might have been involved in buying property recently. But even if you can't find any strong personal recommendations, you can still get online and find out what home buyers have to say. Make sure any broker you deal with is properly licensed. Unlicensed mortgage brokers are a serious problem that sometimes results in criminal activity, and since 2009, the job of a mortgage broker has been regulated by all 50 states. These brokers require a contract and make a healthy commission, so you want to be sure from the start that you're working with an honest one.
2. The Initial Meeting
The best way to tell if you're dealing with an honest broker might not be by asking him questions. It might be by noticing what kind of questions he asks you. Every good broker will check your credit before giving you an estimate on the kind of interest rate they can secure for you. They'll want to know your financial history and discuss your options. Any broker who presents you with a great deal right off the bat is someone you should be suspicious of.
You should also ask the mortgage broker directly about how they get paid. Generally, using a broker will cost you around $300 to $400 more in fees, which can all be worth it if you get a good one, but that might not be the whole story. They can also get paid by marking up the interest rate the banks offer them before passing it on to you. That's totally fine as well, but the problem is when banks offer brokers more money for pushing certain loans. You have to make sure your broker will give you the deal you want, not the deal the bank wants you to have.
3. Things to Remember
Keep in mind that mortgage brokers are independent contractors. They are supposed to work for you, but they really work for themselves, which is why shady brokers who are out to get high commissions from the banks are such a widespread issue. But there are plenty of great, reputable mortgage brokers out there than can help you find the right loan for you and save you money. The rules have changed and the industry has never been more regulated, which is good news for consumers. The biggest benefit of using a broker is choice. If you really need help hunting around for a good interest rate, especially if your credit is not as spotless as it could be, it's important to have a broker on your side.
Most things involved with purchasing a home can be risky, but trusting your broker shouldn't be on that list. Researching the right questions will give you an idea of a broker's credibility, but in the end, you might rely on gut instincts. Never be afraid to look for help when dealing with banks. And never be afraid to keep a high standard for your broker.
Jonathon Cochran is an avid blogger for mckinleyplowman.com.au. If you're trying to find the right mortgage broker, look into the information available at mckinleyplowman.com.au.
Take the Next Step:
- If you are lokking to hire a mortgage broker, consider ArcLoan.com, a Dollar Stretcher trusted partner.
- The mortgage refinance window could close for many people this year. Consider these 5 reasons to refinance your mortgage while you still can.
- Looking to buy a new home? Use our simple tool that compares different lenders to see what your monthly mortgage payment could be. It's private, only takes a minute and could show you how to save thousands!
- Don't overpay for homeowners insurance. Check for a lower rate with this tool from Home Insurance Directly Online.
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