- Are you licensed by the state? In almost every state, mortgage brokers must be licensed to do business in the state where you are buying a home. You can ask for your broker’s license number and check with the state Division of Financial Institutions to check the license number of the mortgage broker you choose.
- What is the interest rate you are offering me and is it the best possible interest rate based on my credit score? Your mortgage broker can help you shop for the best interest rate for you. A lower interest rate means lower payments. Your credit score is one of the main criteria lenders use to determine the interest rate they offer you. A higher credit score should get you a better rate than a lower score.
- As a mortgage broker, how much money will you be paid? Part of a mortgage broker’s job is to bring borrowers and lenders together. Brokers receive pay for providing these and other services. The broker fees can be negotiated. These fees are disclosed in your HUD settlement statement and can include a broker origination fee, processing fee and application fee. Lenders also may pay the broker a yield spread premium (YSP), which is a payment to the broker from the lender, which results in your receiving a loan at a higher rate of interest than what you would otherwise be charged. A mortgage lender or banker will also be paid for their service of providing you the loan. Their fees may include items such as a processing fee, application fee and document preparation fee. These fees may also be negotiated.
- How will I know what fees I will be charged? Within 3 days of submitting an application with your broker, he or she will provide you with a list called a Good Faith Estimate. This list will contain the expected charges for your loan. Many states also require the broker to provide you with separate disclosures listing the fees and charges to be collected up front. Your broker and lender are required to provide you with a list of all fees to be paid by you, including known payments to third parties such as credit reports and appraisal fees. The list must also include prepaid items, payments by the lender to the mortgage broker, or charges by third parties unconnected to the lender. These fees may not be accurately known until later in the origination process, so you should ask your broker or lender to provide you with an updated list of fees and charges at several points during the process. While the fees detailed on your good faith estimate and the fees you actually pay at closing do not have to match exactly, there should not be a huge increase in any of the fees you are required to pay.
- Who will be my lender? The mortgage broker does not lend you money themselves, those funds come from the lender. As your broker helps you shop around, make sure you understand all the terms of the lenders so you can compare and get the best deal for you.
| When you get a mortgage, you might work with an officer at a bank or other lending institution, or you might work with a mortgage broker. It's important to understand the differences between a bank loan officer and a mortgage broker before you shop for a loan. Bank Loan Officers The loan officers at a bank, credit union or other financial institution sell and process mortgages from where they work. They can offer a wide variety of loans, but they typically all come from that specific bank, credit union or lending institution. Mortgage Brokers A mortgage broker is a person who gets paid a fee to bring lenders and borrowers together. Mortgage Brokers work with a variety of lenders from different institutions. Brokers analyze each person's credit situation to decide which lender is the best fit for that person's needs. A broker should help you find the right deal for you. Sometimes this means the lowest monthly payment or the lowest interest rate, but a broker can also help you evaluate which mortgage company can help you close your loan quickly and smoothly. The broker submits the home buyer's application to one or more lenders in order to sell it, and works with the chosen lender until the loan closes. Here are some questions to ask your mortgage broker: | |