Searching for the best mortgage rates and terms can be tough on your own. That’s why most homebuyers decide to hire a mortgage broker. These experts are the middlemen of the loan market and can come in quite handy when you’re planning to get a mortgage, especially if it’s your first time. Instead of going to different lenders by yourself, the mortgage broker does the legwork for you. Brokers are generally paid a percentage of the total loan by the lender you end up working with or from fees charged to you. Here are a few questions you can use when choosing a mortgage broker.
What is your rate?
Mortgage lenders can be paid in several different ways. They’re independent contractors so each lender you speak to may have different circumstances. Find out how the broker is paid to see if he/she has a bias towards a certain lender.
For instance, if a broker is paid by a particular lender for each mortgage he/she brokers, be careful. The broker may steer you to a particular lender even if the mortgage is not an ideal fit for your circumstances.
Alternatively, if you’re going to be paying the broker, the payment is usually a percentage of the loan amount. Since brokers work on commission, a dishonest broker may steer you towards a higher mortgage just to earn a higher fee.
What are the chances of qualifying for a mortgage?
Before you start the home buying process, you want to ensure your finances are intact. If you have a low credit score, income or employment issues, a recent foreclosure or bankruptcy, or high debt payment, you’ll want to share the details with your broker. Be wary of any broker who implies you can get reasonable rates even when you have some financial hiccups. The main idea is to hire a broker you can trust.
What lenders do you find yourself working with?
Mortgage brokers work with several lenders and clients but some work with the same set of lenders. The trick here is to look for a broker with a big pool of lenders from which you can rate shop and get the best deal. As such, you don’t want to work with a broker who works with only a handful of lenders as that will limit your options. Moreover, some lenders will not work with brokers, opting to have in-house loan officers instead.
Can I speak to a recent former client?
In addition to reading online reviews and checking out testimonials, ask the broker for a reference and see what they have to say. A reputable broker will be happy to supply a name, email or number of former clients so be wary if there’s any hesitation or sign of discomfort.
Spare some time to talk to the references and ask how the broker communicated throughout the process, what the fees were, if the loan was worth it or anything else you want to know.
Mortgage brokers can get you the best rates in the market, but it also helps to shop around so you get an idea of the going rates for the mortgage term you want.