According to the NAMB (National Association of Mortgage Brokers), two out of three Americans work with a mortgage broker to purchase a home because of the broker's expertise and wide selection of loan products and lenders. However, with so many so called ?experts? out there, how does one separate the wheat from the chaff? How do you know if a broker is honest? And how do you know they're an ?expert? or not?
The NAMB says that over 70 percent of brokers are legitimate, that is they have safeguards and policies in place to make sure that they stay on the straight and narrow. So what about the other 30 percent? Well, the whole 30 percent isn't bad, but just as in any classroom, you're going to have those at the top, some in the middle, a few at the bottom, and others who simply don't show for class. Obviously, those at the bottom and the no shows would not be your first choice if you were going into surgery and they were holding the scapel, nor should they be handling your loan when you purchase a home or refinance.
Because of the surge in numbers of mortgage brokers in the past few years, there are plenty of incompetent and dishonest brokers out there. In order to avoid the 30 percentile, I offer the following tips to help you find a mortgage broker that is not only an expert but honest and reputable as well:
Don't believe everything you hear. Asking friends or family to recommend a mortgage professional is usually the first place people start. However, how do they know the broker is reputable and trustworthy? Check with your state regulatory offices and licensing bureau once you have some referrals. Better to be safe than sorry.
Use an NAMB certified mortgage broker. Brokers certified by the NAMB practice the highest ethical and professional standards in the industry. There is a ?Find a Broker? link on the NAMB's website at www.namb.org.
Use an Upfront Mortgage Broker (UMB). These brokers disclose their fees to customers in writing in advance at the customer's request. They also disclose the wholesale prices they receive from lenders. For a list of UMBs visit www.mtgprofessor.com.
Honesty is the best policy. If a mortgage broker suggests that you lie on your loan application in any way, he/she is most likely in the 30 percentile. Walk away.
They need to show you the money. If a mortgage broker doesn't disclose your closing costs in three business days, it's probably best to take your business elsewhere.
If you're not bleeding, they shouldn't be applying pressure. A mortgage broker who pressures you into anything you are not comfortable with probably failed ethics. No reputable broker will pressure you into anything you don't feel comfortable with.
There are no stupid questions. Does the mortgage broker answer all your questions to your satisfaction? Are his/her answers straightforward, honest, and respectful?
Do you have a reservation? If you feel comfortable with whom you're working with and feel like they have answered all your questions and put all your reservations to ease, you've probably found a good mortgage broker.
Searching for a loan can be one of the most stressful events in your life unless you take some steps to minimize the anxiety. We will cover some basic things to look out for and explain why mortgage brokers are no different then car sales men and how they stand in your way in obtaining the best mortgage possible
The first thing you need to figure out is, what type of loan is suitable for you situation. One of the biggest mistakes a home buyer makes is picking the wrong loan. Don't base your loan on interest rate by it self, you have too look deeper at the rate you will receive. Many loans expire after 5 years and increase significantly in total monthly payments. Make sure you know your APR rate. Always read the small print and if you don't understand what you are reading, then take the documentation to an attorney. Unlike the mortgage broker, the attorney is on your side.
Let's go over the type of loans available. The most common loan type is the conventional loan, this is the type of loan you would receive from banks, credit unions and mortgage brokers. Another loan type is FHA loan, FHA loan is a loan that is secured by the government, and the one major negative with FHA loan is, PMI ?Private Mortgage Insurance?. PMI will add at least couple of hundred dollars to you loan payments. So it will affect the total price of the home you can afford. Try to pick the conventional loan if at all possible.
Once you pick the loan type, the next things you need to figure out is, the terms of the loan. The following questions need to be answered by the lender. How many years is this loan? Is the rate adjustable of fixed? Is there a prepayment penalty? And don't forget the most important question, Is this the best rate you can give me? Make sure you get an answer to questions asked. The answers will help you establish a starting point and a strategy on getting the best loan possible.
After obtaining the loan type and the terms of the loan, you will then need to shop your loan. Get the number to other lenders and let them compete for your business. The chances are good that somebody will give you a better deal. Caution, if you have a mortgage broker, verify everything he offers and shop his rate. Mortgage brokers make money similar to car dealers, they try to keep the backend money, so in fact they are double dipping, making money on the loan and making more money on the points and keeping some of the percentage from the loan.
In Closing the most important advice you can take away from here is that, you should not trust anybody no matter how nice they are or how well you know them. In these difficult financial times every step you take is important. You have to be determined and stand your ground. Remember, negotiate you loan.
Both Brian Daniel & Gene Kaplan are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Brian Daniel has sinced written about articles on various topics from Free Credit Report Score, Mortgage. Brian Daniel is a loan officer for Bend Mortgage Group Ltd. a mortgage company in Bend, Oregon. He is also the company's marketing coordinator. For more information or help with an Oregon home loan visit. Brian Daniel's top article generates over 2900 views. to your Favourites.
Gene Kaplan has sinced written about articles on various topics from Mortgage. Get some great tips on also look at