Competition between traditional banks home lenders for your business continues to be fierce even in these economic times.
The challenge is to understand all the products available and which ones would best suit your circumstances.
Home buyers are increasingly looking to mortgage brokers to help them navigate this complex environment, although banks continue to offer popular products.
Mortgage brokers can offer a generalized set of loan products, or specialize in areas such as refinancing. Their advice should be impartial and serve your best interests. Codes of ethics are run by organizations such as the American Association of Private Lenders.
Some real estate agents have direct relationships with brokers, and if that is the case, they must declare that interest to you.
Brokers are usually paid by the lender but not always. Sometimes the borrower will pay. However, a broker must never accept payment from both parties for the same transaction and can take a maximum of 3% in commission.
Here are 18 important questions you should ask a mortgage broker.
Credentials:
- Are you a member of a professional association with a code of ethics?
- How long have you been a mortgage broker, and approximately how many loans have you written?
- Can you provide references from some of your clients?
- Why shouldn’t I go directly to my bank?
Process:
- How many lenders do you represent?
- How long have you been offering this range, and how well do you know each of their product portfolios?
- How do you select the loan that best suits me?
- What is Private Mortgage Insurance or Lenders Mortgage Insurance, and do I need it?
Your finances:
- What’s the deposit required to obtain a loan?
- What fees are associated with taking out a home loan?
- What information do I need to provide you to obtain my finance?
- How do my credit cards affect my borrowing capacity? What’s the impact of missed credit card payments? Can you help me deal with that?
Product choices:
- What features are included in the loan(s) you are recommending?
- Can I fix the interest rate now, or at a time of my choosing?
- What are the steps for obtaining this loan?
- How long will it take to get the loan pre-qualified or pre-approved?
Fees:
- If I’m not paying you, then how do you earn your money?
- What commission will you get explicitly paid for writing my loan?