Is a broker the best option to search for loans?

Sweetie · Joined: 17 Jun 2009 Posts: 2

Hi all
I am planning to buy a house, but there so many things i don't know and that scares me. I appreciate any advice. :-)

I went recently to a seminar for first time home buyers and from the information i was given it seems that is better to use a broker to look for a loan. Is that true? I am a little concern because the seminar was given by a broker and he even said that brokers can get greedy sometimes. So, how can i tell if a broker is charging a fair rate or is been greedy. :-(
What other options I have? Or a broker still the better option?

EricJ · Joined: 09 Jan 2009 Posts: 321 Location: New Jersey

Sweetie,

Let me first address the "greedy" concern that you have. You can run into a greedy loan officer whether he or she works for a broker or directly for the bank. You may also be working with a greedy realtor and a greedy attorney who both are looking to make as much as possible.

That being said, I also believe a broker is the best option. If you go directly to a bank, then you are limited only to the programs and rates that particular bank has to offer.

Meanwhile, if you go to a broker, he/she most likely is working with dozens of banks (including the one you would have gone to anyway) and can find the best program/rate for YOUR SCENARIO. The bank may try to squeeze you into one of their loan programs even if it is not right for you.

I hope that helps.

Sweetie · Joined: 17 Jun 2009 Posts: 2

Thanks for your advice. Now my problem is that I am looking for the broker's license verification and on the information I found the status says "not provided". Should I been concern or maybe i need to get the information from another source.

EricJ · Joined: 09 Jan 2009 Posts: 321 Location: New Jersey

Sweetie

I would not be concerned at all. You have two entities who are looking out for you...

1. The state requires that each broker be licensed in that state. They check every broker.

2. Banks will not work with a broker if they are not licensed in that state.

The industry is highly regulated.

Roger_Silvester · Joined: 29 Jun 2009 Posts: 51

Consider using a broker. A good broker can explain your options, match your needs with lenders’ products, and assist with paperwork and loan application forms.

However you can follow the tips to ensure you get value from a mortgage broker.
* Do your homework: research the market first
* Prepare the questions you need the broker to answer so you can make an informed decision. Then phone several brokers to see what they can offer.
* Check the lender's choice: check what lenders are on the broker’s list and ask whether any are usually preferred — and why.
* Watch the fees: don’t pay up-front fees to brokers before credit has been arranged.
* Check the commissions: find out how and what brokers will be paid for arranging your loan, including ongoing trail commissions.
* Explain your needs and requirements
* Get details in writing: ask for written reasons for recommendations, and details of commissions, fees and products. The broker should be able to explain why the recommended product is the most suitable for you.
* Find out how to complain: check whether the broker has a complaints process and is part of an external dispute resolution scheme.

refinancing2009 · Joined: 18 Aug 2009 Posts: 6

Thanks for your advice

Nikhil · Joined: 23 Sep 2009 Posts: 8

Brokers do not make or approve loans. They only act as intermediaries, putting you in contact with a prospective lender. For this they receive either a flat fee from you, or you may have to pay an extra point (one percent) on the amount of mortgage you borrow. Determining how they are paid can save you money.

EricJ · Joined: 09 Jan 2009 Posts: 321 Location: New Jersey

Nikhil

You are incorrect.

John_maxwell · Joined: 23 Oct 2009 Posts: 3

Knowing how to use a loan broker can provide a more competitive range of lending options for the borrower. However, the borrower should also conduct their own research when trying to find the best loan rates available to them.

DanAronG · Joined: 17 Oct 2008 Posts: 103

There's no doubt in my mind that you are better off using a broker, but I can understand your fears over the integrity of any particular broker. I would suggest finding one with a good reputation, and remember that you can have a chat with a broker and decide what you think of them before committing.

askmr · Joined: 11 Dec 2009 Posts: 3

I guess so, because the the main job of being a mortgage broker

valoannetwork · Joined: 21 Feb 2010 Posts: 8

Brokers hate to hear this, but the best thing you can do is shop around. Contact several brokers and compare their relative prices. Use each as leverage against the other. You should understand that it isn't in their best interest to get you the lowest cost loan. Thats your responsibility, so don't hand it over!

robertwhorner1 · Joined: 05 May 2010 Posts: 1 Location: North Carolina

I noticed no one on this post mentioned mortgage bankers (aka mortgage lenders).

I agree a bank is not going to have the best deal and that brokers will be able to easily match what a bank may offer.

However, brokers can not compete with mortgage bankers (lenders). Because all a broker does is talk to lenders for the borrower and then charge a 1% origination fee.

But guess what?

Borrowers can also talk to the lender without a broker and therefore bypass the middleman (broker) and still get the best deal.

AaronNelson · Joined: 02 Jul 2010 Posts: 5

Find a private mortgage banker who isn't a bank. They usually have the best processors and underwriters

savana · Joined: 22 Dec 2010 Posts: 15 Location: United States

Roger_Silvester wrote: Consider using a broker. A good broker can explain your options, match your needs with lenders’ products, and assist with paperwork and loan application forms.

However you can follow the tips to ensure you get value from a mortgage broker.
* Do your homework: research the market first
* Prepare the questions you need the broker to answer so you can make an informed decision. Then phone several brokers to see what they can offer.
* Check the lender's choice: check what lenders are on the broker’s list and ask whether any are usually preferred — and why.
* Watch the fees: don’t pay up-front fees to brokers before credit has been arranged.
* Check the commissions: find out how and what brokers will be paid for arranging your loan, including ongoing trail commissions.
* Explain your needs and requirements
* Get details in writing: ask for written reasons for recommendations, and details of commissions, fees and products. The broker should be able to explain why the recommended product is the most suitable for you.
* Find out how to complain: check whether the broker has a complaints process and is part of an external dispute resolution scheme.

These are some really better tips that are essential for those who are buying home and they will gain the advantage also.