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| A Realtor's Perspective on Mortgage Brokers Most Lenders and banks use the ploy of "PRE-APPROVAL" to attract new mortgage customers and you may find yourself locked in to non-negotiable mortgage terms when dealing exclusively with just one institutional Lender. If you intend to shop for your mortgage it is recommended that you use the services of an experienced mortgage broker. For the lack of a better term, mortgage brokers are order takers. The more deals they put together, the more experience they are suppoosed to glean but you will find this is rare. Oh they have taken the required mandatory courses and passed the prerequisite test to be called "mortgage broker" but that is not all that makes one. Qualified auto mechanics are not always good mechanics... are they? Educated lawyers are not always good solicitors... are they? Seven years of med school and years of internship do not always make a good doctor... does it? Real estate agents, surveyors, builders and the list goes on... Well the same applies to mortgage brokers. It takes no creativity to put an easy deal together and 95% of all real estate transactions are just that... EASY. We are talking about using a mortgage broker to get a mortgage so shouldn't you be getting the very best posssible deal available? Here's How It Works An accepted Agreement of Purchase and sale by a Realtor is provided to the mortgage broker who takes a mortgage application from the Buyer and simply submits it for a credit check. They already know what the current rates are for the various institutions, so it is just a matter of which one will give them the largest fee for this deal. There is no secret science or magic to arranging a mortgage but they do tend to keep a sort of mystique about the whole process. Buyers pay for the appraisal on the house they just bought but never get a look at the actual appraisal document, never mind know what the price that was arrived at. The banks consider the appraisal their documentation even though the Buyer paid for it. In fact, the banks reward those mortgage brokers who send them more business and you'd think it would be the customer who received the benefits because they are the ones paying the shot. Makes you wonder who exacvtly the mortgage broker is really working for... eh? The financial community has become a mutual admiration society amongst those that are involved in the day-to-day activity and they need that to keep their positions sacred. Think of it. They hold the pulse to the creditworthiness of the masses and that includes you and me. Be A Watch Dog As with any business you hire for services, look beyond the grinning personality and pay attention to the competence of the individual. Yes, there is a degree of competence in the business of mortgage arranging along with honesty and integrity. Mortgage brokering is an invented vocation that grew out of necessity when Real Estate Brokers just didn’t want to handle all facets of a transaction. As with any vocation, it is assumed that someone doing the same job over and over again is bound to get good at it. Well, that is not always the case. The personality and idiosyncrasies of the individual will end up dominating the way the person runs their business. There are large sums of money being transacted in real estate and sometimes an ordinary person gets caught up in their own self-importance when the opportunity to participate becomes egocentric. It is important to ask what the background of a mortgage broker has been and you may be surprised either way. Many are struggling and also part time something else. Always remember that just because a person has a certificate for any qualification, it does not mean that they are competent in that field. Mortgage brokering can be a shady area of the financial business when the client turns over the decision making process of their transaction to the mortgage broker. Keeping in mind that mortgage brokers get paid by the institutions that they send business to so it would make sense that some may be motivated by the referral fees that come from a specific lender. You are allowed to ask what the fee is. You may or may not get a straight answer. Before you agree to even apply for a mortgage, ask friends or your Realtor to refer you to a proven experienced mortgage broker. Failing that, interview those you may find through ads, other connections or better yet by word of mouth references. WHAT YOU GET In employing the services of a mortgage broker you should have some assurance that you should acquire the best rate, terms and all of the prepayment options you can get. Ask all of the questions you have predetermined a head of time but sign no application until you have discussed and understood all aspects of your personal financial situation. Then, if you feel comfortable, allow this professional to go to bat for you. You are the customer here and the lenders really want your business. If you qualify at one institution, chances are you will probably be welcomed at all of them and this is where your mortgage broker can negotiate a great mortgage package for your next purchase. Keep tabs on the mortgage broker and don't let them snow you with double talk if indeed they do. Demand to get prompt return calls and be kept in the picture. If there is any hesitation at the beginning in this regard, look for another mortgage broker. Your mortgage broker will only take one application from you and will shop around for your best possible mortgage. Now you are beginning to see why a trusted competent mortgage broker is imperative. When the time comes, you will sign the mortgage application which gives the mortgage broker permission to check your credit history. Once this is accomplished and an quasi-approval is normally forthcoming, usually with some conditions such as obtaining an appraisal, requesting a copy of a survey just to name a couple. These conditions will also vary according to the type of property you finally will purchase. These lenders realize that maybe you are shopping around for your mortgage and may not give your application serious consideration because they feel the chances of you becoming their customer are reduced with each new credit check by other lenders. The mortgage broker will correlate all of the necessary paperwork and documentation with the lender who will submit the same to your lawyer in preparation for the closing of the sale just days before the date of completion of the transaction. Since it is common knowledge that lenders have been known to renege on verbal financing commitments it is incumbent upon you to ensure that you receive a written confirmation from the lender as to exactly what product they are providing to you stipulating all the conditions and the length of time it is valid for. Your mortgage broker will ensure this precaution is taken to protect your interests. PreApproved (Quasi) If you have done all of tis before you found and offered on your new house then you are ready to do more than window shopping. You know how much you can afford to spend and have a time period in which to do it in. Armed with this information you can now explore the world of the MLS (Multiple Listing Service) with a competent Realtor, again of your choice. But that to, is another topic you may want to explore by going to AGENCY1O1 Save The Day There are circumstances (self employed, backruptcy) where a conventional mortgage lender (Banks) will not be able to help you and in this respect you will really need to undertake the services of a mortgage broker who has access to secondary lenders and also private funding. There are times when a competent mortgage boker will "Save The Day" by putting together an impossible mortgage situation for you and when that happens, you have found the rose among the thorns. Remember, if you try to do this yourself that every time you make an application for any kind of credit, a notification appears on your personal credit report. You must refrain from putting in applications to every lender you speak with otherwise your credit summary may appear that you have been shopping around and worse, that you have been turned down for credit although this may not be the case. BACK TO www.realestate1o1.com |