Should You Use A Mortgage Broker?
There are a number of parties that share the blame for so many homeowners being in danger of foreclosure today. You can blame borrowers for buying houses that they really had no business thinking they can afford. You can blame lenders for relaxing their lending standards to the point that just about anyone could get a mortgage loan with almost no documentation. You can also blame mortgage brokers, who recommended loan programs that came with substantial risk of payments increasing after the first few years.
Some people are having a hard time trusting mortgage brokers in the wake of the housing crisis. There are situations, however, where using a mortgage broker still makes a lot of sense. It’s not just consumers who are wary of mortgage brokers now. Several banks and underwriters refuse to extend financing to borrowers who are trying to obtain loans through mortgage brokers.
It’s a dilemma that every borrower is faced with. There is still a place for mortgage brokers, but they won’t always give you the best deal. Mortgage brokers come with the reputation of trying to profit from borrowers. One survey showed that the average borrower paid over $400 more going through a mortgage broker than going directly through a bank. But banks have the reputation of being either unwilling to lend right now or unable to provide the flexibility that some borrowers need.
Your best bet as a borrower is to give mortgage brokers a shot, but now is the time to shop around more than ever before. Calling banks, credit unions, brokerage firms, and mortgage brokers to differentiate between available rates and fees can help you to see where the best deals can be found.
If you decide that a mortgage broker has the best rates, you still have some work to do to determine whether or not you should put your fate into the hands of that broker. Ask if they are willing to guarantee their rates, and how they are compensated for your loan. If they can’t give you a straight answer, you probably need to look elsewhere for the loan you want.
One final recommendation is to ask your mortgage broker to sign a statement that he or she is willing to work in your best interests. Lawmakers are trying to make this a standard part of a business relationship with every mortgage broker. Some will sign and some won’t, but at least you’ll have an extra layer of comfort in working with that particular broker.
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Tags: banks, mortgage, Mortgage Broker, Rates
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