When shopping
around for a mortgage, there are now more
options to choose from than ever before. You can
apply for a mortgage the traditional way through
the bank that you're associated with, but you
also have the option of going through a mortgage
broker, a credit union, professional or trade
associations, the financial institution that
manages your investment accounts, housing
agencies, private home financing companies, or
even the seller direct. With so many options,
how do you decide which is the right one for
you?
Despite the
myriad of choices, what it comes down to is a
question of whether you want to go through a
mortgage broker or apply with the lender
directly.
Mortgage Broker
Mortgage
brokers
are the middlemen that will put you in touch
with a lender that may meet your particular
needs. They are not the ones who actually lend
you the money, and are independent of banks or
other financial institutions. What a mortgage
brokers can do is to present inexperienced
borrowers with a variety of lender options, and
help in selecting a
mortgage lender based on the
financial and personal information that the
borrower provides. They can also help in
organizing the necessary paperwork, arranging
title searches and property appraisals, and may
be useful for those who have been
rejected from
most lenders.
However, there
is an inherent conflict of interest because most
mortgage brokers are paid on a commission based
on how much you borrow. Therefore, always ask to
be presented with different options before
making your final decision.
How to choose
Whether you
choose to go with a
mortgage broker, or deal
with a lender directly, there are so many to
choose from that you may not know where to
start.
You can begin by
finding out how the industry is regulated in
your state by contacting either the state's
department of banking or division of realty and
finding out if your particular broker or lender
is licensed and in good professional standing.
The Library of Congress, which has in index of
state and local government web sites, is a good
place to start.
If your state
does not require that brokers be licensed, check
with the local Better Business Bureau to see if
there have been any complaints about your lender
or broker. You can also ask your real estate
agent or friends and family for recommendations,
but maintain a healthy skepticism, and always do
your own research.
Mortgage Glossary2
