Mortgage brokers earn their living by bringing lenders and borrowers together. They are similar to real estate brokers, who bring buyers and sellers together. As you have to be careful in getting a real estate agent, you have to take similar care to get a mortgage broker. The borrower pay the commission to the broker, so may encounter certain brokers who would be tempted increase the fee. One of the ways that he can achieve that is by approaching a lender who is charging a higher interest rate, resulting a high borrowing for you and higher commission for him. Also, watch out for brokers who encourage you to take some extra mortgage for other expenses at home. It is always nice to have some extra money, but you should analyze what this extra cash would cost you. If your loan amount goes up, the net payment required to be paid goes up as well as the commission you pay the broker. Obviously, these brokers may not be the best suited for you. Sometimes, the broker are awarded fee from the lender that they are suppose to pass on to you, but this does not happen always. You need to be vigilant and watch for any extra fees paid by the lender and listed on your closing statements. These are usually referred to as "paid outside closing" or "POC." Check your closing statement for such fees, which often are listed in a different place than other closing costs. Also, ask your broker if he is receiving any such fees because you would reduce his commission by the same amount as any "POC" fees. So why would you use a broker? Brokers have access to several lenders and provide a wide selection of loan products and terms from which you can choose. Brokers will usually contact multiple lenders regarding your application. |
