A mortgage broker is an individual who acts as an intermediary between a lender and a borrower. They are useful because they gather, collect and analyze the personal financial data of borrowers in order to establish a link with the borrower. Due to their expansive access, and expertise, they are able to give borrowers competitive second mortgage options only for the price of a small commission (that they get from the lender).
How should you choose a mortgage broker?
When you decide that hiring a mortgage broker is the right move for you, you may want to ensure that they meet a set criteria so that you are assured that they will look out for your interest and needs. Here are a few of the basic factors you might want to consider:
- Their Commission Rate
It is important to understand the nature of mortgage brokers. They are independent contractors who will have different requirements and conditions. Thus, every contractor you go to will give you a different rate.
Their rate highly depends on the lender; if you have stumbled upon a broker who has a regular relationship with a lender, there may be certain bias that exists because of the monetary compensation they are getting. This would mean that they are making you choose a lender who may not have your best interests in mind. You should be wary about exponentially high loan amounts as well because the higher the mortgage, the higher the commission for the broker. When choose a mortgage broken, approach someone who’s credible and you can trust.
One of the qualities that you should value in a broker is that they are honest. When you show them your financial records, they should be able to tell you what your chances of securing a mortgage are. Additionally, they should also not misguide you into opting for a mortgage that you will find hard to manage in the longer run. Realistic expectations should be expected from both sides, you and the broker.
- Proposed Lenders
Any broker who works with the same set of lenders for all of their dealing is one that you should stay away from because they have established relationships with lenders based on how good they have been for them in particular. Thus, they may not consider your exact needs and requirements. Additionally, the only reason why you go to a broker is so that you get multiple completive options. If they give you the same set of a few then that defeats the purpose.
- Success Rate
The best way through which you can guide yourself in regards to choosing a broker is through contacting their previous clients. You can ask the broker if you can get their information and their reaction will tell you everything you need to know. If they are hesitant then that means their success rate with customers will not have been good. However, if they readily give you information it probably means they are highly reputable professional.