As a former mortgage broker, let me coach you on finding a good mortgage broker to help you with your home loan. A good mortgage broker can be the difference between getting the home you want and missing out entirely.
Consider the following observations as a guide in choosing a mortgage broker.
A good mortgage broker won’t make promises she can’t keep. Mortgage underwriters — the people who decide whether or not you get a loan — are human. They follow strict criteria, but at the margins they are required to make judgments. This means that anyone with any blemish or question mark in the file (and who doesn’t have one?) may be rejected. The mortgage broker’s only choice will be to submit the loan to another underwriter with another lender. Brokers that make lots of promises about quick closings and guaranteed financings should be avoided.
Your real estate agent can refer you to a good mortgage broker. Ask her for at least 2 names so that you can interview the candidates before making a decision.
In this day and age, you can probably close your loan without ever meeting your mortgage broker. Everything can be done by phone, fax and email. The key test of service is how quickly they return phone calls. If they don’t call back quickly when you are a prospective client, they are unlikely to call back quickly when you are a customer with a thick application file stuck in underwriting 3 days before a scheduled closing.
Lots of options
A good mortgage broker should be able to offer both FHA loans and “conventional” loans. If you need a jumbo loan (a loan larger than FHA or conventional loan limits), be sure to ask up front. You may not know whether you will be best served by an FHA or a conventional loan before you complete the application process, so try to find a mortgage broker that can do both.
The closing costs associated with a home loan are extraordinarily complex. Federal disclosure rules haven’t solved the problem. To add to the frustration, some costs you pay at closing aren’t closing costs at all (property taxes, property insurance and prepaid interest), but you still pay them to the tune of thousands of dollars at closing. Because they are complex, a mortgage broker can easily hide hundreds of dollars in fees. Compare rates and loan origination fees primarily, but scrutinize the “Good Faith Disclosure” of closing costs when you first apply for your loan. Read more about closing costs here on FamilyShare.
If you consider these five factors and talk to at least two recommended mortgage brokers, you should be safe. You may also want to check with your bank or credit union as they sometimes offer existing customers a slightly better deal.
No matter whom you choose, educate yourself about what to expect so that you don’t overpay.