What to Look for in a Mortgage Broker - When working with a mortgage broker to get a new loan for your home, there are certain things you should look for.
Possibly the most important aspect of a good mortgage broker is one who listens to you. You need to know that the person is working in your best interest, and how can they do that if they dont know what your interests are?Interviewing your mortgage broker will help you decide if this is the person you feel comfortable working with on your largest financial transaction. You should be confident that your mortgage broker will provide you with the service and attention you require to insure a smooth transaction.
A Mortgae broker should be accessible to you at reasonable times. They should always return your phone calls within a reasonable period of time.
Questions to Ask Your Mortgage Broker - If you are considering applying for a mortgage, it is important to ask questions and have your questions answered. You need to feel comfortable that the decision you are making is the right one. Here are some questions you might want to ask.
What loan program based on my situation will be right for me? Your mortgage broker should be able to help you decide on a mortgage. There are numerous loan programs to choose from such as Adjustable Rate Mortgages (ARM), Fixed Rate Mortgages, and Pay Option Arms. They will also be able to help you determine what the length of your loan term should be; 15 year, 30 year , 40 year, or even 50 year.
Is there a prepayment penalty?
A prepayment penalty means that if you pay off your loan within a certain amount of time (by selling or refinancing) you will have to pay a penalty. Usually this penalty is several thousand dollars. Prepayment penalties are not always bad. In fact, you can usually get a lower interest rate if you have a prepayment penalty. But if you think you will be selling or refinancing your home within the next few years, it may be in your best interest to avoid having a prepayment penalty. In any case, you should at least know if you have one.
Difference Between A Broker And A Bank - A Mortgage Broker and a bank both sell mortgage loans to borrowers but there are many differences in the way they operate. So, how do you choose where to go for a loan? It all depends on what type of loan you need.
Local commercial or retail banks only offer their own mortgage products. If they do not have a loan for a home buyer, rather than searching for a suitable loan from other lenders as a mortgage broker would, they would have to decline the loan application, forcing the home buyer to find other lenders. This can be time consuming and be costly if financing is not secured in a timely manner.
Because brokers have access to such a wide array of mortgage products, they can often find a better loan for you than if you went directly to the bank.
The biggest difference between a broker and a bank is the number of lenders and programs they have access to. A bank is typically limited to the rates and programs that they offer themselves, while a broker has access to dozens (and in some cases hundreds) of different lenders. Generally speaking a broker is able to offer a wider variety of loan programs, and can rate shop for you.
Banks vs. credit unions vs. mortgage brokers - When you apply for a mortgage, you are most likely going to apply with one of these three types of mortgage lenders – banks, credit unions, and mortgage brokers. Each of the three are different from the others in some important ways.
Some borrowers have the misconception that mortgage brokers are middle-men. These borrowers falsely belive that they can save money by dealing directly with the banks or credit unions. The reality is that mortgage brokers usually offer better loan programs with lower rates, because loan brokers work with many lending institutions to find the best deal for the borrower. A bank or a credit union is just one of many lending institutions.
Local banks and credit unions often offer attractive financing terms for Home Equity Lines of Credit. If you have a good relationship with a local bank or credit union and are in the market for a HELOC ask if you qualify for any special promotions.
One other major difference is that mortgage brokers must disclose all of their compensation to their borrowers. This includes any monies paid to them by the investor. Banks do not have this requirement.
A bank has only one set of underwriting guidelines and only as many home loan programs as they offer. With a bank you are either approved, declined or counter-offered on your mortgage application with them, unlike a mortgage broker who can send your loan to another lender if you are turned down/declined or not approved how you want to be approved.
Mortgage brokers also have access to wholesale rates, which in turn is passed along to the borrower. They also have acces to lenders who do not have a retail side, which allows the borrower more financing options
A mortgage broker will have access to several lenders, who each have different mortgage programs. One of these programs could be the perfect fit for your financial situation. Also, unlike many banks and credit unions, a mortgage broker can offer Stated Income, No Ratio, No Doc, Pay Option ARMs, and several other mortgage programs.
Neighborhood retail banks usually offer only a few loan programs. If they do not have a perfect loan program for an applicant with a particular situation, rather than sending the applicant to another bank with the right mortgage program, bank loan officers would sell the next best loan that the bank has to offer, which may not be a good loan for the applicant at all.
