If you want the best mortgage for you but don't know where to start, a mortgage broker can do the shopping for you.
Difficulty: Moderately Easy
Things You'll Need
- Real Estate Agents
- Real Estate Brokers
- Online Mortgage/finance Services
Contact state and local boards of Realtors for lists of mortgage brokers in your area. Ask your own real estate agent or friends for references.
Call recommended brokers and ask how many different lending institutions they work with.
Ask prospective brokers how they are compensated. Brokers work for either a flat fee or a percentage of the mortgage amount.
Ask what types of institutions, or individuals, the broker works with. This can be particularly helpful if you are having trouble getting a loan through conventional local lenders.
Ask about different loan programs that might be available. A good mortgage broker keeps a steady eye on the markets and can provide you with help getting a special deal, such as public money that is available for first-time buyers.
Tips & Warnings
- 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.
- If the board of Realtors in your area does not have a list of brokers, contact the National Association of Mortgage Brokers for the location of your state's association. They will, in turn, be able to refer you to local brokers.
- If you are a first-time buyer and are low on your down payment, look for a broker who will work for a percentage of the mortgage; this percentage will likely be about one percent of the loan, and can be included in your mortgage payment rather than paid as an out-of-pocket expense.
- If you are torn about using a broker, ask yourself what type of person you really are. If you are the type that waits until the last minute to buy a gift because you dread shopping, chances are a mortgage broker will end up saving you money.
- Brokers are of the greatest value to people who hate the drudgery of shopping, or who have marginal credit.
- One way to protect yourself is to pay the broker's up-front fee (if any) with your charge card. If he fails to make good, you can dispute the charges and get your money back.
- Some brokers have been known to push programs with high points or whopping interest rates - which means more money for them. This occurs most frequently with people who have problem credit.
- Beware of anybody who tells you what you want to hear.