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Bankrate: Mortgage broker may save you time, money

By Ellen Chang, Bankrate.com

Published: December 23, 2019, 6:02am

Hiring a mortgage broker can help relieve some of the stress and loan-related questions when you’re buying a house, especially if you’re a first-time homebuyer.

In their role as the middleman between borrowers and lenders, a mortgage broker can help you find a lender that meets your needs and financial requirements, such as a preference for a lower down payment or the best interest rate possible. If you’re seeking a Federal Housing Administration or Veterans Affairs loan, for example, a mortgage broker with experience in working with veterans, or who understands the requirements for FHA loans, can simplify the process.

Variety is another benefit of brokers. Using a mortgage broker can help you find the right lender for your specific needs, especially if your situation in terms of your credit profile or the property is unusual.

Working with a mortgage broker has advantages over going directly to a lender to obtain a mortgage. Consumers can save money during the process, obtain more loan options and have someone explain the fine print to them, which can save time.

Questions to Ask

Here are questions to ask a prospective mortgage broker:

Can I get your references? Ideally, you found the broker through a reference from a friend, relative or co-worker. But if you found the broker another way, it’s smart to check on references.

Ask for the names and contact information for the most recent two or three customers who closed loans with the broker. Then call and ask what their experience was like. Did the broker treat them fairly? Did the loan estimate have accurate information? Were there any issues closing the loan? Did the closing disclosure have roughly the same costs as the loan estimate?

Above all, ask if they would do business with the broker again.

How long have you been in business? How long is long enough? Choose a broker who has been in the industry for at least three years (but preferably more). Ask how much experience the broker has with specific loan types you might be interested in such as FHA or VA loans, for example. You can check to see if they hold the proper licensing to be a mortgage broker in your state through the Nationwide Mortgage Licensing System and Registry.

How do you handle rate locks? Once you commit to working with a specific lender, you can request a rate lock. This ensures that you receive the same the interest rate you’re quoted for a set time frame, regardless if rates go up or down. A typical rate lock period lasts up to 30 or 60 days, or you can pay more money to extend the rate lock. Also, you can add a float-down clause, if your lender permits it, within a rate lock that guarantees you a lower rate if rates fall during your lock period.

Ask your broker for a loan commitment letter from the lender. It should have the lender’s name and specify the interest rate and points, the date the rate was locked, and when the lock expires.

The mortgage industry is changing constantly and a good mortgage broker can help a homeowner understand the lengthy process from getting a good interest rate to paying lower fees to closing the loan on time.

SHOULD YOU WORK WITH A MORTGAGE BROKER?

Homeowners who choose to work with a mortgage broker can receive more in-person interaction and let a licensed professional do the legwork for them, said Rick Masnyk, a branch manager at Network Funding in North Smithfield, R.I.

In addition to consulting a mortgage broker, shop around at several mortgage lenders to obtain the best interest rate and term of loan that fits their situation. Whether the consumer chooses to use a mortgage broker or banker is a personal choice. Bankrate’s rate tables are a good place to start your search.

A mortgage broker does the work of shopping around for your mortgage loan to find the best rates, while providing the “deep expertise required to close your loan quickly and efficiently,” Silver Fin Capital Group’s Andrew Weinberg says.

Many brokers have access to a powerful loan pricing system that helps price your loan across many lenders at one time.

Brokers maintain a large network of wholesale lenders and can provide consumers multiple offers, rather than being limited to the offerings of just one lender.

HOW DO YOU CHOOSE A MORTGAGE BROKER?

Finding a mortgage broker requires a bit of homework: ask for referrals from your Realtor, friends and family.

Check their licensing with your state professional licensing authority, read online reviews and check them out with the Better Business Bureau, says Jackie Boies, a senior director of housing and bankruptcy services for Money Management International, a Sugar Land, Texas-based nonprofit debt counseling organization.

Check with a couple of different sources and do your due diligence, Masnyk adds.

Questions to Ask

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