| In the 1990's everyone was crying about how | | | | broker funds your loan at 6% the mortgage |
| evil lawyers and contractors are. Lawyer | | | | broker makes zero in commissions. The higher |
| jokes were common tales told around cocktail | | | | the interest rate they close your loan with, |
| tables and functions. At the turn of the | | | | the more commission they receive. Moreover, |
| decade, mortgage brokers were added to the | | | | if they charge you an interest rate below 6%, |
| list and they too are under a lot of scrutiny | | | | they have to pay money out of their own |
| and the pun of many jokes. | | | | pocket to fund the loan, or charge the client |
| | | | what is called a "discount point" to get the |
| Are mortgage brokers evil? The answer is | | | | rate they want. Luckily the law has a cap on |
| simple no. Are there shady mortgage brokers | | | | how much of a commission a broker can make on |
| that will try to con you out of your hard | | | | a particular loan. Nonetheless, your goal |
| earned money? Off course! Every profession | | | | should be to lower the interest rate as much |
| has bad apples! Are these bad apples the | | | | as possible. |
| majority? No, let's discuss why. | | | | |
| | | | What is the lesson to be learned here, when |
| 1) Mortgage brokers want your business - Most | | | | mortgage brokers quote you a rate, they have |
| mortgage brokers work on commission and rely | | | | room to lower it; unless they gave you par |
| heavily on word of mouth advertising to | | | | pricing, which is not likely. Given our |
| generate clients. Furthermore, 50% of a good | | | | example above a broker might quote you 6.5%, |
| mortgage brokers business is repeat | | | | where the broker makes $2,000.00. If you are |
| customers; mortgage brokers have an incentive | | | | a good negotiator you can get the broker to |
| to service their customers properly and keep | | | | lower the interest rate, where the broker |
| them in the long haul. | | | | only makes a $1,000.00 on the deal, you will |
| | | | save big bucks! |
| 2) The competition keeps them honest - Given | | | | |
| the influx of many new mortgage brokers in | | | | Be Careful Of the Fees |
| the last couple of years, the mortgage | | | | |
| business is a very competitive field. There | | | | By law, a mortgage broker is permitted to |
| are a large number of brokers competing for a | | | | charge you a fee for finding you the right |
| small base of customers. Brokers will almost | | | | loan. When negotiating, don't neglect these |
| always give you their best rate in order not | | | | fees. Find out what they are and make sure |
| to loose your business. Remember, brokers | | | | you talk to them about it. Fees are |
| don't get paid until they fund the loan. This | | | | negotiable; don't let anyone tell you |
| is also a good reason to speak to at least | | | | otherwise. The thing to ask yourself for when |
| four different brokers from different | | | | looking at fees is, what am I paying this fee |
| companies, let them compete for your loan and | | | | for, is it for an appraisal, notary service, |
| you will almost always shine at the end. | | | | processing etc? Is the fee there because |
| | | | something must be done to fund the loan and |
| 3) The law is there to protect you - God | | | | is nessesary or is the broker just trying to |
| bless America! We have many laws in this | | | | make some money off of me? Remember, the |
| country that govern mortgage brokers and let | | | | broker makes his money on the interest rate |
| me tell you that the lending laws are not | | | | spread between what he charged you and what |
| very forgiving in this country. Mortgage | | | | the "par rate" is. Fees outside of that are |
| brokers will take a lot of heat when they do | | | | considered "Junk Fees" and should be avoided |
| shady deals and all it takes is one simple | | | | if possible. If the broker, charged you a |
| complaint. Make sure you get everything in | | | | super low rate, give him a little, they need |
| writing from your broker and you will be | | | | to make money somewhere. |
| protected, simply as that. | | | | |
| | | | Pounding Your Mortgage Broker For The Best |
| The Bad about Mortgage Brokers | | | | Rate |
| | | | |
| Mortgage brokers do not fund your loan | | | | To successfully get the best rate on your |
| themselves; they use wholesale lender and | | | | loan with a broker, keep in mind that the |
| banks to find you the right loan and save you | | | | broker needs to make a living. If you grind |
| money. The problem arises in how they are | | | | them too much, chances are they will not take |
| compensated. Wholesale lenders do not set | | | | you seriously and simply not want to do the |
| interest rates, nor do the brokers. The going | | | | loan. Be reasonable, let the broker make |
| interest is dictated by the secondary | | | | money off of your loan and they will work |
| mortgage securities market. How rates are | | | | hard to get you the lowest rate. The broker |
| dictated is a discussion by itself, which is | | | | can go back to the wholesale lender and grind |
| unimportant in our discussion. | | | | them for a lower rate, but if there is no |
| | | | money in it for the broker, there is no |
| Lets simple assume the going "par rate" for a | | | | incentive. |
| 30 year fixed mortgage is 6%. If the mortgage | | | | |