Stay One Step Ahead of Your Mortgage Broker - Part 2
A Home Buying Article Contributed by Robert Scalia
What is the Main Problem with Trusting a Mortgage Broker?
Without resorting to generalizations, you'de be hard pressed to find a mortgage broker who didn't know every last trick in the book. And no matter how much you try to stay ahead of the game, there is no way that you would be able to tell when a mortgage broker might just be giving you the short end of the deal.
The best way to protect yourself is to know a couple of the more common tricks that a mortgage broker might revert to when dealing with you. Think of it as preemptive strike.
What are Some of the More Common Tricks a Mortgage Broker Will Resort To?
A mortgage broker may often insist he's charging you a lock price without actually locking the price. What happens in this situation is that if interest rates don't rise in that short period, your mortgage broker will end up pocketing the lock premium. And if the interest rates do in fact rise, you're broker might just decide to up and disappear.
You should know that this is much less of a hazard when you are dealing with with a lender instead of a mortgage broker. The best way to deal with this practice is to choose a mortgage broker who has been in the business for a number of years. The majority of mortgage brokers who cheat on rate locks are almost always new brokers, although you shouldn't assume that they all will, or that old brokers won't do the same. Remember, old habits dies hard.
Another and maybe better way to protect yourself is to insist on seeing the loan commitment letter from the lender who your mortgage broker alleges has already locked your loan. If a mortgage broker refuses to show you this letter, that's probably a sign he isn't being hones. Do not deal with this person anymore.
And remember, take the advice of your real-estate agent when shopping around for a mortgage broker. They have a vested interested in making sure you get the deal closed. Their commission depends on it.
And Another Mortgage Broker Cheat That is a Time-Tested Favorite
MA mortgage broker loves to make promises of no-cost loans. But often, the types of loans that are advertised on television, in newspapers and on the Internet as no-costs loans are actually loans with high rates for which lenders will pay points.
In fact, most of these loans may even be zero point loans, but there may be substantial fees of other types that you are not immediately aware of. Keep in mind that in this business, false advertising is not limited to brokers.
In order to protect yourself, you want to be sure and check the APR. If the loan is a bona fide no-cost loan, the APR should be the same as the interest rate. If the APR is significantly higher, it is probably because there are substantial fees that you are not seeing.
