Two Things to Watch for When Choosing a Mortgage Broker

Two Things to Watch for When Choosing a Mortgage Broker

Whether you are refinancing an existing home in Los Angeles or buying a new one, before you commit to any realtor or lender here are some things you to consider.

When you make a call to a lender what is the first thing on your mind? Most people would say interest rate. Not far behind that would probably be points and closing costs. And, having been the guy on the other end of the line, the most important thing in my mind would be commitment. If I don’t get a commitment from a possible borrower, he will probably take his business somewhere else. There are all kinds of ways to get a borrower to commit to you. Here is a shared tact that many brokers and loan officers use and it should raise a red flag for you.

One thing you need to watch for is brokers or loan officers who will not give out any information about rates or fees until you fax them your documents. More often than not, when a broker is asked for a rate he will be given a dozen reasons why he can’t give you a rate right then. Then he will explain that in order to give you an accurate quote he will need to see all your documents and could you please fax them to him today. I used to hear this all the time from clients and I nevertheless don’t see what your documents have to do with rate. When I was in the business I could always give my client a rate and I would tell them to keep up me to it. If I changed it on them, feel free to go somewhere else.

If you are refinancing an existing home I just need to ask a few questions like; what is your home worth, how much are you going to borrow? I would also need to know how are you going to verify your income; W-2, 10-99, bank statements, or stated? Last but not least, what is your credit like? After gathering the above information, if a client can tell me about what his credit score is, I can give him a rate that I can deliver on. If you really don’t know what your credit is like I would have to check it. Armed with that score I can give you a rate you can count on and all it takes is one fifteen minute phone call. Most people won’t do that because it takes an intimate knowledge of the programs they offer and an ability to calculate your rate the first time without making a mistake. One small error and the rate could change considerably. They would rather try to get your documents thinking that if you are going to go to all the trouble digging up your paperwork, you probably aren’t going to do it again for someone else. So if the guy on the phone won’t give you a rate and he just wants your documents you might want to call someone else until you get what you want.

The other thing you should watch for are brokers or loan officers who warn you about letting their competitors check your credit. Don’t let them scare you into sticking with them. Everyone is very sensitive about their score and making sure they don’t do anything that can adversely affect it; like having their credit checked. First of all, you can check it online for free and it doesn’t affect your score. If you have a lender check it you will take a hit. What that amount is depends on so many variables I’m not going to get into it here. Once you have your credit checked by a lender you have a 30 day grace period where no matter how many lenders check your score it won’t knock it down so be prepared to do all your mortgage shopping in that time period.

I thought this was shared knowledge but I used to hear a lot of people tell me the following scenario. When they began working with a lender, the loan officer/broker asked permission to pull their credit. That is normal and usually done in the beginning of the time of action; no problem there. Then the broker would tell them not to let anyone else check their score or it will drop and they will not be able to get the rate they had just promised you. If you are ever told that just walk away. You need to find an honest broker.

Remember; just because you are working with a top tier company, it doesn’t necessarily average you’ve got a top tier guy on the other end of the line. There are a number of other practices out there that you might run across but I chose to focus on these two because they are so shared and so frustrating to deal with. Don’t let someone railroad you into committing to them before you are ready. In the meantime; good luck and happy borrowing.

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