Mortgages aren't created equal, nor are the professionals who originate them.
A good mortgage broker can save you a lot of money while a poor one can make the home-financing process a nightmare, which is why experts recommend shopping around to find the best fit.
The best brokers have relationships with multiple lenders to have access to a slew of loan products, says Richard Bettencourt, Jr., branch manager at Mortgage Network.
“Mortgage brokers have the ability to actually work with a variety of different wholesale lenders. It's not uncommon for a mortgage broker to have as many as 30 or more wholesale investors at their disposal" says Bettencourt. "Not every wholesale lender will be able to close every transaction, so it's important for the mortgage broker to have program diversity.”
Home buyers should also make sure a broker has the time to take on new clients and learn their financial situation. According to Leslie Piper, consumer housing specialist with Realtor.com, a red flag to watch out for is a professional who makes blanket statements or generalizations without understanding your financial situation.
"Your mortgage broker should have a good amount of experience in the industry in order to be able to truly provide you with all your options," says Piper. "Be on the lookout for large assumptions and brokers who aren't taking the time to dive deep into your financial goals." A broker also needs to be well versed in FHA loans since they account for a large portion of the available mortgages. Bettencourt recommends choosing a brokerage firm that also employs experienced loan originators. Borrowers can check the credentials of loan originators at the NAMB website and find out their work history and if there is any enforce actions against them.
When talking to potential brokers, Bettencourt advises inquiring about the average time it takes for loans to close, appraisal timelines, if there’s a loan processor on staff and how many lenders they work with.
While that no frills, super cheap mortgage broker you found online can be tempting, Brian Simon, COO at New Penn Financial, says you get what you pay for.
“Most brokers have access to the same pool of potential investors, so the key things to look for would be price vs service, length of time in business, reputation.”
The regulations that followed the 2007 housing bubble burst has changed the mortgage industry and significantly increased the amount of paperwork required for a loan, making communication a big part of the process.
Bettencourt says you should feel comfortable that a broker will always be available to talk about any potential problems and answer any questions.
“Much of the process can be streamlined if the level of communication between the consumer and the loan originator is efficient and accurate,” says Bettencourt. “The biggest red flag in my opinion would be poor communication.”