US mortgage brokers
Buyer beware when choosing a mortgage broker. A little sunshine talk just might bring rain.
Mortgage brokers in the U.S. can be classified in two ways: upfront mortgage brokers, and sunshine blowers. It is apparent that these names are not of a legal process, but named to help the consumer determine a broker’s validity.
Find a broker, not a rate
An upfront mortgage broker knows the market, knows the rates and always takes the best interest of the borrower into consideration. He’ll shop the lenders much better, simply because he maintains contact with them at all times.
Price quotes
Every borrower is concerned with how much it’s going to cost. In the mortgage game, this can be a very confusing and deceptive ordeal. Quotes change daily, sometimes even hourly. An upfront broker will deliver an honest quote at the time, while sunshine blowers will make promises they can’t always keep.
Although prices do fluctuate, the key is the lock- in rate, and the upfront broker will give you the best possible rate at that time. Lower quotes are manipulated in ways that can eventually turn into outrageous amounts once the sunshine blower has opened his bag of tricks.
The price of services
An upfront broker will negotiate a fee in the very beginning. By doing this, the borrower is protected from any unforeseen tricks. Sunshine blowers are not even aware of broker’s fees in the beginning because they quote prices that include the fee. The fee is not set in concrete so the shady broker is not bound to uphold it. This creates more stress for the borrower because he must always be guarded.
Most upfront brokers charge a percentage of the loan amount. There are, however, several other legitimate ways to set their fee.
- fixed dollar amount
- percentage of the loan
- hourly rate for time
- combination of the above
The borrower can also expect an increased fee if the mortgage is harder to handle, like a borrower with credit problems.
Other things to consider
A borrower should not select a broker on rates alone. Asking the broker about their qualifications and experience is not disrespectful. It’s the sign that the borrower is looking out for his own interests in a sound and educated style. If a fee seems high, the borrower should not hesitate to ask the broker why he feels his work is worth the higher fee. Trust a real estate agent. They usually have a list of brokers they’ve worked with in the past who are reliable and educated.