Choose a Mortgage Broker

Buying a house can be a daunting task, and for a first time borrower you might not know all the ins and outs that are involved in taking out a home loan. A mortgage broker can help - they are the professionals that match your needs with a home loan from a selection of lenders. But it's important to choose the right broker - one who is knowledgeable, accredited, and covers a wide range of lenders.

Steps

Finding a Mortgage Broker

  1. Get recommendations from others. Start your search for a mortgage broker by getting recommendations from friends, real estate agents, colleagues, and other homeowners. Your real estate agent will likely have acquaintances in mortgage lending that they have been working with for a long time, or you colleagues might be in a similar financial situation and have advice on which broker to seek out.[1]
    • It will be beneficial to your search to ask as many others for recommendations as possible. This stage is about collecting information to make the most informed decision possible.
    • Call your real estate agent or friend, or meet with your colleagues during lunch to ask questions, such as “Are you satisfied with your mortgage broker?”, “Do you know of any mortgage brokers with good reputations?” or “Why did you use a mortgage broker instead of a lender?”
  2. Research brokers online. Many mortgage brokers also have online profiles and portfolios, whether they work alone or within a larger and more established firm. Although many of the rates posted online may not be completely up to date, you can research brokers online for their reputation and peer reviews.[2]
    • The United States’ Nationwide Mortgage Licensing System (NMLS) has an online registry you can search.[3]
    • Try looking for well reviewed brokers to get in touch with on sites like lendingtree.com or zillow.com.
  3. Ignore unsolicited advertisements. Some lenders and brokers advertise rates that are not real or do not adequately reflect the mortgage market. The mortgage market, like the stock market, is fluid and changes on a daily basis. Be suspicious of all unsolicited advertisements you receive, whether in an e-mail, voicemail, or leaflet.[2]
    • Remember, choosing a mortgage broker should be in your hands not a lender’s or broker’s.

Interviewing Mortgage Brokers

  1. Schedule interviews with at least three brokers. Once you have referrals, reviews, and recommendations, call around to schedule a few interviews with potential brokers. Try to schedule these interviews as close together as possible, ideally all in the same week. Make a list of questions you would like to ask, such as questions about which lenders they work with, number of years in the industry, references from past clients, or typical closing times.[4]
    • Try to develop a list of similar, if not the same, questions to ask to better compare their information after the interview.
  2. Ask about the application process. Many brokers now offer online platforms for applying for a mortgage loan. Be sure to ask about average closing times, specific requirements (credit score, down payment, debt-to-income ratio, etc.), and all documents you will need throughout the entire process.[5]
    • Applying for multiple mortgage loans can negatively affect your credit score. Be sure to only apply for the loan that you want.
  3. Inquire about rates, fees, and points. Mortgage brokers connect lenders with homeowners and make a profit from this connection. This profit can come in the form of points, generally attributed to one percent per point of your mortgage rate, or commission fees. It is in a broker’s best interest to give you the best rate possible; however, it is important to inquire about fees and points to make sure that you are getting the best deal for you and not just the broker.[2]
    • A sign of a good broker is the amount of options they give you. Avoid brokers who only give one option or are pressuring you to commit.[4]
    • Ask a broker to breakdown both brokerage and lending fees to have a better understanding of the process.
  4. Look for brokers who ask a lot of questions. Finding a broker who asks questions about your financial history and goals is imperative as brokers will be carrying out business between you and your lender. The more a broker knows about you, the more appropriate rates and service they can provide.
    • Look for brokers who ask questions about your marital status, bank balances, incomes, credit scores, and previous homes owned since all of this information will determine what your best loan options are.[4]
    • If you find a broker that is just reading you rates then seek another who is more actively engaged with your financial history, current situation, and goals.
  5. Ask about poor or low credit scores. Even if you have a below average credit score you may still qualify for many mortgage loans, although you may have to pay a premium upfront. The more transparent you are about your credit score the better information and agreements your broker will be able provide.
    • Ask about Federal Housing Administration loans that are tailored to those with low credit.[5]

Deciding on a Mortgage Broker

  1. Look for a broker you can trust. Mortgage brokers are your access point to your lender, so be sure the broker you choose is one that you can trust to provide you with service and support throughout the entire process. Review your interviews and note brokers that were personable, generous, and informative.[5]
    • Ask yourself questions, like “Did this broker help me understand my credit score?” or “Did they provide a detailed account of the loan agreement?” or “Were they interested in my future financial goals?”
  2. Compare information. Now you should have a large amount of information on each broker you’ve interviewed. The next step is comparing the information you’ve gathered to make a decision on which broker is right for you. This can be done on your own, but consulting a financial adviser will help you decide which broker is best for your present financial situation and your future goals.[6]
    • Bring your notes, application material, and all interview information to your meeting with your financial advisor.
  3. Decide on which broker is best for you. Now that you have all the relevant and necessary information, have compared information or met with a financial advisor, you are ready to make your decision on a mortgage broker. Remember to choose a broker that is both professional, involved, and gives you confidence in your decision.

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Sources and Citations

  1. ↑ http://www.nolo.com/legal-encyclopedia/how-choose-work-mortgage-broker.html
  2. ↑ 2.0 2.1 2.2 https://www.credit.com/loans/mortgage-questions/how-to-find-and-choose-mortgage-lender-broker/
  3. ↑ http://mortgage.nationwidelicensingsystem.org/Pages/default.aspx
  4. ↑ 4.0 4.1 4.2 http://themortgagereports.com/20388/shopping-for-your-mortgage-broker-yields-lower-rates-more-lending-options
  5. ↑ 5.0 5.1 5.2 https://www.nerdwallet.com/blog/mortgages/4-must-ask-questions-choosing-mortgage-broker/
  6. ↑ http://www.nytimes.com/2013/12/01/realestate/choosing-between-mortgage-broker-and-bank.html?_r=0
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