Mortgage Broker
Mortgage brokers facilitate borrowers by offering them a wide range of mortgage loans so they can choose a product that matches their individual needs. Mortgage brokers are one of the largest sources of selling mortgage loan products around the world. The mortgage loan companies pay mortgage brokers commission for recommending borrowers. Mortgage brokers provide a range of services such as marketing the property, finding a buyer, and assisting in negotiations. Brokerage commission, the fee charged by mortgage brokers, is usually paid as a percentage of the sale price of the house. Some mortgage lending companies act as both mortgage lenders and mortgage brokers providing both serivces to clients. Consequently it may not be clear whether you are dealing with a mortgage broker or not. As with mortgage lenders do not choose the first mortgage broker you like. It never hurts to shop around to see who provides the best customer services and will help you to find a mortgage loan that fulfills all your needs. Keep in mind that mortgage brokers may offer different interest rates and terms to two people with similar credit scores and financing standing. This is because they are allowed to keep the difference (as profit) by mortgage lenders. Make sure you do not agree on higher interest rates and more stringent terms than someone else with similar circumstances. A good way to avoid this situation is to compare terms and conditions and interest rates by different mortgage brokers.
Remember mortgage brokers are not responsible for choosing the mortgage loan company for you. Their only job is to recommend you various options suitable for your needs. You should be careful in this regard because most mortgage brokers will recommend mortgage loan companies paying them the highest commission without any regard for interest rates and terms and conditions of the mortgage loan. As with mortgage loan companies, choose a mortgage broker that has a well established track record of excellent customer services and high customer satisfaction ratings. There are a large number of mortgage brokers operating in almost all countries around the world. Some of the largest mortgage brokers around the world are:
- GMAC Mortgage
- Countrywide Home Loans
- Ameriquest Mortgage Company
- Wells Fargo
- Washington Mutual
- Chase Home Finance
- Century Mortgage Corporation
- EMC Mortgage Corporation
Many mortgage loan companies are also correspondents. Correspondents initiate their own funds and back up their mortgage loan themselves. These mortgage loans are then offered (by correspondents) to bigger lenders who either retain them or sell them in secondary markets. Mortgage loan plans are normally based on conditions accepted by the larger lenders so they accept them readily. Correspondents usually offer a wide range of products from different sponsors and act as an intermediary on their behalf. Therefore a correspondent lender resells various products by different mortgage companies in their own name.
The need for mortgage brokers is eliminated in bank mortgages since the loan officer of the bank deals with you directly. Bank mortgages refer to mortgage loans extended by commercial banks around the world. Most of the large commercial banks provide home and car mortgages to borrowers with sound financial standing. However it is easier to get mortgage loans from institutional mortgage lenders in comparison to getting them from commercial banks. Institutional mortgage lenders have easier qualification requirements and lower interest rates on mortgage loans in comparison with bank mortgages most cases. When selecting a home mortgage it is wise to be pre qualified for the bank mortgage. Pre qualification indicates that the borrower has already been approved by the commercial bank providing the bank mortgage. Pre-qualification smoothes out the bank mortgage process along with shortening it. Pre-qualified bank mortgages are a very useful tool when negotiating with multiple sellers. There are both advantages and disadvantages of working with a mortgage broker including the fact that they handle the legal issues for you, may provide you better deals than bank mortgages since they provide wholesale mortgage loans, are required to divulge yield-spread premium and help you compare multiple options quite easily. Along with advantages of hiring a mortgage broker are disadvantages. Some of them include their tactics to overcharge you in most cases, make exorbitant promises ending up disappointing you and may be incompetent leading to costly mistakes in your mortgage loan! On the contrary there are both advantages and disadvantages of signing up for bank mortgages. The advantages are building up on existing relationship, established trust, and better rates in some cases and eliminating the hassle of making monthly payments. Disadvantages of bank mortgages include conservative loan programs that may not be suitable for your needs, not divulging yield-spread premium and lengthy and bureaucratic loan approval process.
There are various types of mortgage loan available in the market. Do not let your mortgage broker push you to buy something that does not match your needs. You should keep in mind your distinct needs (such as your budget, desired payback period and interest rate etc) when shopping for mortgage loans. Never buy the first suitable mortgage loan you come across. It pays to compare features of different types of mortgage loans as well as comparing same type of mortgage loans across mortgage companies. Contacting either one mortgage broker or multiple mortgage brokers can help accomplish this purpose. You can also get a rough idea of interest rates and terms and conditions offered by various mortgage loans companies by using their online mortgage calculators. Mortgage calculators are also available in various types i.e. you can use them to calculate your interest rate and monthly payments on different types of mortgage loans such as fixed rate mortgage loans, adjustable rate mortgage loans, balloon mortgage loans, capped mortgage loans etc. Assess the mortgage loans very carefully to ascertain that you are not paying for services that you do not require or did not opt for. Mortgage points, home insurance, home warranties and hazard insurance are prime examples of these extra costs.