Need a hand with your loan? Find yourself a mortgage broker. If you are sick and tired of searching for banks which are going to give you the best loan deal, let a mortgage broker do the work for you. It’s OK, everyone needs a little help sometimes.
What mortgage brokers do is sell you the access to the funds you need to purchase that property you want. They are a middle man between you as the borrower and the lending company. But do you have the guarantee that they’ll do their best? Well, in most states there is a legislation that says they are accountable for their recommendation. If what they have suggested is found to be faulty for your personal circumstances, mortgage brokers (http://en.wikipedia.org/wiki/Mortgage_broker) are considered financially liable. Still, like in any business, there are always those who are only thinking of their own profit. Those wouldn’t hesitate to encourage you to go for the deal they’ll come better of with, not you.
There is an ongoing debate whether mortgage brokers charge excessive fees and recommend the loans they know they can make more profit from. Their fees are paid either from the lender or by you; occasionally they get paid partially from both parties. They charge usually 1 – 3 % of the loan, sometimes more. Mortgage brokers may have an agreement with the lenders – if you pay higher interest – which means higher profit to the lender, they get more money. They may even have an incentive set by the lenders. For instance, if mortgage brokers manage you to sign a deed which imposes penalties if you want to refinance your loan in first few years time, mortgage brokers will get paid even more. Not fair, ah? Well , there might be a way out and it is called the ‘set fee’. There are many mortgage brokers that work with set fees, and if your situation is not particularly ‘sensitive’ (low income and bad credit) that you, sort of, need to be happy with what you get, you want to search for those ‘set fee’ mortgage brokers.You have to do what you can to prevent you from being overcharged.
Shop around, see several banks, write down how much they charge and ask them to explain what they provide. The same goes for mortgage brokers.
Ask them with how many lending companies they are usually working with and which one they would approach for your loan? What about those lending companies’ terms and rates, do they check them and how much their fee would be If you are choosing a mortgage broker or a bank, you want to get serious about it and do all your homework. One more thing that is equally important – you want to monitor your mortgage repayments, as banks make errors and more of your money end up in their account.
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