Using a Mortgage Broker - Is This Option For You?
June 19, 2007
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The lending market is flooded with individuals claiming that they will get you approved for a home mortgage loan no matter what your situation. The number of mortgage brokers has increased in the last few years. They are challenging traditional lending institutions for the majority of the mortgage sales each year.
Many homeowners have used mortgage brokers with much success. They have qualified for loans that would have been turned down at a bank. Their experience has been a good one. Some homeowners have not had this positive experience for various reasons.
Whether applying for a loan at a bank or through a mortgage broker, do your homework. Learn all that you can about mortgage terminology and exactly how a mortgage works. Compare adjustable rate and fixed rate mortgages so you have an idea of what you are looking for when you visit these institutions.
Broker Basics
Mortgage brokers are not regulated by the federal government. Most states don’t require licensing or any specific educational requirements for those interested in the industry. This means that there are some sharks out there just waiting to feast on your hard earned cash.
Their purpose is to broker loans that are offered by several different sources. The more loan sources there are available, the greater the chance that a non-traditional borrower will qualify for one of them. A non-traditional borrower could be someone with poor credit, no credit, no money for a sufficient down payment, or a self-employed individual.
Things To Consider
A potential homeowner should investigate potential brokers before doing business with them. This will help you to avoid being taken advantage of. If you don’t know anyone who has used a particular mortgage broker before, then you will have to do things the old-fashioned way.
Have the mortgage broker give you a paper copy of the loan program they are trying to offer you. Make sure that the documentation states clearly the responsibility of the lender, any fees, and how much the final loan amount will be. A good-faith estimate for the loan should also be obtained. Now you can compare the different types of loans and choose the best one.
A week or two before the closing, mortgage buyers may want to lock into a low rate if it becomes available. Get a signed rate lock document from the mortgage broker to verify that the rate you chose is the rate that will be applied to your loan. Having a signed document can avoid such errors as missed faxes.
When shopping for a mortgage, a mortgage broker is a possible option for loan approval. Because they are not sanctioned by any federal body, you should do the legwork required to find out which ones are legitimate and which are not. That could be the difference between getting appropriate financing and getting fleeced.
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Posted by admin | Filed Under Home, Money & Finance
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