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Comparing Mortgage Brokers

By   |  Posted in First-Time Homebuyers

Consumers: Five Questions to Ask Your Mortgage Broker

Finding the right mortgage broker can mean the difference between having a frustrating experience and going into your closing with confidence. Here are five questions you should ask your mortgage brokers when applying for a home loan.

Five Questions for Mortgage Brokers

  1. What types of loans are available? There are several mortgage products available in today's market. A knowledgeable mortgage brokers will be able to explain to you the difference of each from fixed or adjustable-rate loans, to 15 or 30 year conventional loans, to FHA or jumbo loans --and when each is appropriate and for which borrowers they're best suited for.
  2. How do you get paid? Mortgage brokers technically get paid by borrowers through commissions paid by mortgage lenders? Some mortgage brokers may instead receive what's called a yield spread premium (YSP), which is the difference between the lender's wholesale price for the mortgage and the broker's final selling price. This can take the form of a higher mortgage rate or be covered in fees such as points. While some firms may be willing to disclose their fees and commissions, some are less inclined, but knowing this can help you get the lowest rate, hence cheapest mortgage.
  3. How long have you been in business? While you should always try to get a referral from a trusted source, you may need to engage a mortgage broker without one. In such a case, you'll want to know that you've got an experienced hand helping you get your loan, preferably someone who has been though difficult markets like this one. You should ask if they are members of any local or state trade associations, which often have education guidelines and ethics requirements they are required to follow.
  4. What are the fees associated with my mortgage loan? It's extremely important to know what kind of fees you are required to pay at closing. Fees might include those for an appraisal, credit reports, and title insurance. In some cases, you may be able to have certain fees waived or have them paid by the seller at closing.
  5. Can I lock in the mortgage rate and for how long? A lock period can be important if you have an adjustable rate loan and/or expect mortgage rates to rise shortly after you apply for a loan. In some cases, you may be required to pay a fee to lock in the rate.

It's important to find a mortgage broker you can trust. Ask for referrals from friends or family who have recently purchased a home, or research mortgage outlets online at HSH.com.

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