Should i trust mortgage brokers

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What is a Mortgage Broker. Should I use a mortgage broker, or go direct? Written by Sebastian Anthony. What are the different kinds of mortgage broker? Generally, there are three types of broker Tied brokers: These are usually recommended to you by a particular mortgage lender and offer deals only from that one mortgage provider. You avoid paying broker fees.

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Tool Find a retirement adviser. Calculator Redundancy pay calculator. Home Homes Buying a home. Homes Buying a home. Mortgage advice: should you use a mortgage adviser? Risks of not getting advice. Not getting advice means you have to take full responsibility for your mortgage decision. And in exchange for giving the broker those details, they handle all the lifting of mortgage loan shopping. Well, for one thing it saves you time.

You don't have to spend hours looking for a loan because the broker is handling that. They usually have a larger network of lenders they work with so they can really drill down to what types of loans you're most likely to qualify for and what interest rate you're likely to get.

Mortgage brokers are supposed to help you find the very best rate possible, based on your credit and financial profile. That's all to the good because the lower your rate, the lower the total cost of borrowing ends up being. And aside from all that, the mortgage broker takes care of communicating with the mortgage lender once you decide on a loan. You give the broker all the paperwork and information the lender needs for underwriting. That gets passed on to the lender.

Ideally, all you have to do is answer any follow-up questions the lender directs to the broker. Then, show up at closing to collect the keys to your new home. In return for doing all that, the broker charges a fee, which is usually a percentage of the loan amount.

The buyer or the lender can pay this. If the broker expects the buyer to pay, they might offer what's called a lender credit, which essentially builds the fee into the loan. I was working on growing my freelancing business and raising two kids and I just didn't have time to get bogged down in the details of finding a mortgage. I found them through an online search, filled out a loan prequalification application and waited to hear back. Within 24 hours, the president of the company reached out via email to introduce himself.

So far, so good. He asked me to sign off on an electronic form giving him permission to check my credit. I agreed and a couple of hours later, he came back with some initial rate quotes for a few different types of loans FHA, conventional and USDA. Pre-approval means that a mortgage lender checks your credit and finances to conditionally approve you for a loan. I was really leaning towards the USDA loan, since those require zero money down. But here's where things with the broker started to go off the rails.

What the broker didn't tell me -- in fact, what no one at the company seemed to know -- is that you can't qualify for a USDA loan if you have enough in cash savings to make a 20 percent down payment. By the time the broker got clued in and let me know, I'd already filled out the full mortgage application for the loan, with the hard inquiries on my credit report to prove it. This is about a month into working with the broker.

I filled out yet another application for the new loan. And I'm not doing this online either--I had to fill out paper applications and pay to have them FedExed to the broker overnight. Since a month had gone by from my last time applying, I also had to go back and get new copies of all my bank and financial statements.

I was approved for the loan pretty quickly after that.