Don't let the bad apples in the industry trick you. Find out what to watch out for when dealing with mortgage brokers so you can get the best deal possible.
When dealing with mortgage brokers, being honest is the most important thing. Not all brokers are honest and give you all the information you need to trust them and make a good decision about the deal they suggest. Don't get me wrong, not every mortgage broker is bad. Just don't forget how much power that commission has over their suggestions. And, of course, there are bad apples in every business.
By knowing about the following broker sins, you can find a broker you can trust and make sure they get you the best deal. Don't be afraid to ask questions. That's the most important thing.
Sin 1: Giving preference to their loan product.
You need to know if the mortgage broker is also a lender, in other words, if they offer their own loans. If they do and they sell their own product, there needs to be a clear, understandable reason why their product is the best choice for you.
Sin 2: Letting commissions change your mind.
The lender you choose to borrow from pays the broker a fee. You should ask the broker if they get extra money if they send you to a certain lender. For example, do some lenders pay more commission? If that's the case, they may have a bias about which lender they tell you to use. They might be tempted to send you to the lender who pays the most, even if that's not the best option for you.
Again, you need to be told why the product and lender are the best choice for you in a way that is clear and easy to understand. You should also ask how many different lenders the broker works with. They can't say that they will find you the best loan product on the market for your needs if they only work with 20% of lenders.
Sin 3: Hiding how much the mortgage really costs.
When looking at or comparing different types of home loans, make sure the broker gives you the comparison interest rate. The comparison rate shows you how much a home loan will really cost by taking into account all the fees and charges you can expect to pay. So you can easily compare different types of home loans.
Sin 4: Not telling someone something.
Know everything. You need to know everything that the broker can do for you. Do they continue to help and serve you after you get your loan? Find out how long if so. Also, how much do you charge? Both theirs and the lenders'. Before any papers are signed, all of this needs to be made clear.
Sin 5: Letting a client not know something.
Make sure that you know what the pros and cons are for you. You need it to be clearly explained to you so you can understand it. This is so you can think about it and decide for yourself if refinancing is really the best thing for you. A bad thing that some mortgage brokers do is called "churning." Churning is when someone refinances a mortgage just to get a commission, even though the person who owns the mortgage doesn't get anything out of it. If you make sure you understand the pros and cons of the refinancing deal for yourself, you won't be able to fall for this trick.
Sin 6: Being Uninsured
Do the brokers have their own insurance for their work? This keeps professionals from getting sued for work that wasn't done properly. They will all have it. But the brokers shouldn't think that the insurance of an umbrella organisation will cover them. The broker must know for sure if they are protected or not.
Sin 7: Not being good enough.
Is the broker qualified to help you with your loan? In every country, there are reputable organisations that give mortgage brokers credentials if they take certain courses. Find out who these groups are and make sure the broker you're working with is a member or has been given credentials.
