Good Mortgage Broker vs. Bad Mortgage Broker
According to the NAMB (National Association of Mortgage Brokers), two out of three Americans work with a mortgage broker to purchase a home because of the broker’s expertise and wide selection of loan products and lenders. However, with so many so called “experts” out there, how does one separate the wheat from the chaff? How do you know if a broker is honest? And how do you know they're an “expert” or not? The NAMB says that over 70 percent of brokers are legitimate, that is they have safeguards and policies in place to make sure that they stay on the straight and narrow. So what about the other 30 percent? Well, the whole 30 percent isn’t bad, but just as in any classroom, you’re going to have those at the top, some in the middle, a few at the bottom, and others who simply don’t show for class. Obviously, those at the bottom and the no shows would not be your first choice if you were going into surgery and they were holding the scapel, nor should they be handling your loan when you purchase a home or refinance. Because of the surge in numbers of mortgage brokers in the past few years, there are plenty of incompetent and dishonest brokers out there. In order to avoid the 30 percentile, I offer the following tips to help you find a mortgage broker that is not only an expert but honest and reputable as well:
1. Don’t believe everything you hear. Asking friends or family to recommend a mortgage professional is usually the first place people start. However, how do they know the broker is reputable and trustworthy? Check with your state regulatory offices and licensing bureau once you have some referrals. Better to be safe than sorry.
2. Use an NAMB certified mortgage broker. Brokers certified by the NAMB practice the highest ethical and professional standards in the industry. There is a “Find a Broker” link on the NAMB’s website at www.namb.org.
3. Use an Upfront Mortgage Broker (UMB). These brokers disclose their fees to customers in writing in advance at the customer’s request. They also disclose the wholesale prices they receive from lenders. For a list of UMBs visit www.mtgprofessor.com.
4. Honesty is the best policy. If a mortgage broker suggests that you lie on your loan application in any way, he/she is most likely in the 30 percentile. Walk away.
5. They need to show you the money. If a mortgage broker doesn’t disclose your closing costs in three business days, it’s probably best to take your business elsewhere.
6. If you’re not bleeding, they shouldn’t be applying pressure. A mortgage broker who pressures you into anything you are not comfortable with probably failed ethics. No reputable broker will pressure you into anything you don’t feel comfortable with.
7. There are no stupid questions. Does the mortgage broker answer all your questions to your satisfaction? Are his/her answers straightforward, honest, and respectful?
8. Do you have a reservation? If you feel comfortable with whom you’re working with and feel like they have answered all your questions and put all your reservations to ease, you’ve probably found a good mortgage broker.