Quick Mortgage Tips – Consider Using a Broker

When shopping for a mortgage, don’t limit your options to just local banks and credit unions.

Though you may feel more comfortable working with a large, established lender, working with a mortgage broker can prove to be a better experience.

Mortgage brokers work as liaisons between the borrower and the bank or mortgage lender, negotiating rates and loan programs, as well as preparing all your documentation and holding your hand throughout the entire process.

One key benefit to working with a mortgage broker is that they have access to wholesale rates, which are typically considerably better than retail rates you’d be offered if you worked directly with a bank.

You also have the added value of working with a real person that will be with you during the entire process, who you can contact whenever you have questions or need status.

With a large bank, you may feel the wrath of bureaucracy and wait days before getting a returned phone call or hearing any new status on your loan.

And rest assured, though you’re working with a broker, you’re still getting your loan from a major bank, just through a different channel.

Mortgage brokers have access to lender rates from all the leading banks, including Wells Fargo, Countrywide, Citibank, and more.

And once the loan is closed, your mortgage will be serviced by a leading bank or lender, just as it would if you worked directly with a bank.

You’ll also get to see what the broker is making on the deal, if you look closely at the Estimated Hud-1 at closing.

It will be listed as YSP, or yield-spread premium. This is the fee the broker receives from the bank in exchange for bumping your mortgage rate a little higher than the par rate.

If you work directly with a bank, you’ll never know the YSP because it only has to be disclosed once the loan is sold on the secondary mortgage market, long after your loan closes.

So now you’ve got a taste of how a mortgage broker works, and why it may make sense to use one.

But remember, when selecting a broker to work with, screen them thoroughly to ensure they’re competent, honest, and experienced.

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