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Do I Need to use a Mortgage Broker
Shopping For a Mortgage - A bill is moving through Congress that would ban a common practice from a few years ago, where brokers earned more money by putting clients in loans that were potentially damaging. The legislators’ ire is tarring even those brokers who never engaged in such shenanigans. All of this is happening just as borrowers need plenty of guidance. Mortgage rates are low, fueling demand for refinancing. But banks’ loan rules seem to change by the day, and many banks don’t have the staff to handle the volume.
So if you’re hoping to refinance or looking to snap up a bargain home in the next year or so, you’re faced with a tricky question. Given the number of institutions that want nothing to do with mortgage brokers, shouldn’t you stay far away from them as well?
Mortgage brokers work for themselves, not for you. They do not provide a personal shopping service and may compare only a handful of lenders on your behalf. If you want to be sure you’re getting the best rate and the lowest costs, the only way to come close to succeeding is to hunt extensively on your own.
But it’s also possible that consumers simply don’t know they could do better. A study for the Department of Housing and Urban Development published last year examined 7,560 30-year, fixed-rate Federal Housing Administration loans that closed in the middle of 2001. It found that when mortgage brokers were involved, borrowers paid about $300 to $425 more in fees than when consumers worked directly with lenders, other loan characteristics being equal.
That, at least, is a start, but you shouldn’t limit your mortgage shopping to a single broker, and brokers don’t expect you to. Nor should you stop at just a couple of brokers. Here are three of the most important steps on your journey to home financing.
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Ahorre June 12, 2009 06:27 PM