Since the real estate crash of 2008, mortgage brokers are under close scrutiny by the Consumer Finance Protection Bureau for the information they give potential borrowers. Although the majority of brokers try to quote the best rate for consumers, some in the industry feel brokers do not have the consumer’s best interests at heart. New predatory lending laws protect consumers from rogue brokers in many ways, but some brokers who wish to prey on uneducated borrowers manage to slip through the cracks. That is why consumers should learn some basics about mortgage brokers and their job roles and responsibilities.
What Mortgage Brokers Bring to the Table
Reputable brokers usually maintain an extensive list of lenders giving borrowers an opportunity to compare terms from multiple companies. Brokers also help consumers sift through the mounds of paperwork involved in mortgage contracts.
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The bottom line is they want potential borrowers to apply for mortgages through their companies. Therefore, consumers must ask some critical questions before applying with any broker.
Potential borrowers must ask mortgage brokers for references. Consumers should talk to the references and ask if the broker treated them fairly. Borrowers should also ask the references if the final closing costs matched the initial good faith estimate. Finally, consumers need to ask if the references would do business with that broker again.
Many reputable brokers report that the question borrowers ask most often is how long have they been in business. With a refinancing boom in the housing market, many new brokers entered the playing field. Although a new mortgage broker does not signal a bad broker, many of them will leave the industry once the housing market stabilizes. A good tip is to choose a broker with at least three years of experience.
Disadvantages of Mortgage