How to Choose The Right Mortgage Broker
Getting approved for a home loan can be a complex and daunting task for future homeowners. That’s why it’s a good choice to seek advice from a competent mortgage broker.
The main advantage of using a mortgage broker is options.
They help you increase the amount of lending options available to you. Therefore, you can make the most educated choice between the entire spread of options they lay out.
Most borrowers make the mistake of only speaking to a single lender, or only their personal bank. However, having more options places you in a powerful position in terms of the interest rate, the terms of your mortgage, and how fast you’ll get approved.
To give you a few illustrations of the benefits:
In this article I’d like to give you some tips and suggestions on choosing the right mortgage broker for you. By following these suggestions, I guarantee you’ll find the perfect match for you.
The simple process I’m going to share with you breaks down to the following 3 steps:
- Compile a list of potential mortgage brokers.
- Sort, sift and separate the good from the bad and ugly.
- Choose the right one mortgage broker for you.
Let’s take a look…
Step #1: Compile Your List
The first thing you’ll want to do is create a list of mortgage brokers to choose from.
I recommend a list of approximately 10 to 15 people.
It’s important to understand before you get started that this part of the process is divergent. Meaning, you don’t want to make a conclusion yet on whom to choose. You simply want to collect a cross-section of mortgage brokers you think could be a good match.
Let’s take a look at the different ways you can build your list.
Ask family, friends and associates to refer you to any mortgage brokers they’ve used in the past.
Also, consider asking people whose home is within the price-range of the home you’d like to buy. The reason is because some mortgage brokers specialize in getting loans for homes in varying price ranges.
Here are a couple of good questions you can ask:
- “Do you know any good mortgage brokers?”
- “How do you know them?”
- “Were you satisfied with their performance?”
Some people you interact with via referrals will not have a website. If they don’t have a website, don’t be too quick to judge them. For instance, some older mortgage brokers may not have a web-presence, however they are extremely competent at what they do.
Obviously searching online for a mortgage broker will give you plenty of options. However, this can be an overwhelming amount of information to sort though.
Type into Google, “Mortgage brokers near me” and sort through the selections. As I mentioned before, take note of people who appear to specialize in the price-range of homes that you’re looking for.
Check out websites like Yelp.com, LendingTree.com, Reviews on Google, and LendingTree.com. Also, there’s a good article put together by ReviewTrackers.com that has a list of review sites. Check out that article here: https://www.reviewtrackers.com/popular-review-websites/
It feels strange to say, but the next thing you want to do is make sure your mortgage broker is not a criminal. Punitive actions that have been taken against them are usually public record. There’s a website called The United States’ Nationwide Mortgage Licensing System (NMLS). You can go there and check out their registry to do a background check. Also https://www.ripoffreport.com/ is also a good place to look up anyone who could have a shady history. If the person you’re researching is a criminal, take them off the list!
Be skeptical of advertised rates. What I mean is: just like a doctor wouldn’t prescribe you medication without doing tests, a mortgage broker should always gage your situation before telling you what your rate could be. Most people who advertise “Lowest Rate Guaranteed!” or “Get a home loan at x %!” are running bait-and-switch ads. I tell borrowers they will ALWAYS qualify for the best rate depending on their situation. So, if you found the broker through one of those ads, consider taking them off your list too.
Step #2: Sort, Screen and Separate
Now that you’ve compiled your list of potential mortgage brokers, the next thing you want to do is qualify them properly. In this section I’ll give you instructions for separating good mortgage brokers from the bad so you can find the right one. You want to meet with them over the phone, online video, or even live. Schedule an interview with each of mortgage brokers on your list. When you meet with them ask questions like:
- How many years have you been in the industry?
- Can you show me your license?
- Do you have References? (and actually reach out to those references).
- How much time does it typically take for your clients to get approved?
- Which range of credit scores get accepted for loans like mine?
Hint: Be reluctant to apply for many different mortgages. It could have a negative impact on your credit score.
More Questions to Qualify Your Mortgage Broker
The following is an excerpt from my book How to Choose the Right Loan Officer. I wrote it for real estate agents. However, these tips also apply to consumers as well.
“When you’re vetting a loan broker, ask them specifically: “What loan programs are you an expert at?” Also “What were the programs you used to close your last six transactions?” See, some loan brokers can do vanilla, A-paper, perfect files. If someone tells you, “The last three transactions I closed where were 65 percent loan-to-value ratio, with a 750 FICO score and a million dollars in the bank,” well that’s stupid-simple. A trained ape could do that loan. Anybody can do that.
Most people who buy two or three million plus-dollar homes are going to be professionals like attorneys, doctors, dentists, partners in a firm, or people who own/run corporations. So you may ask your mortgage broker: “Tell me about the last transaction you did where you had an attorney partner.” Or any question in regard to the perfect clients you’re looking for.
Some loan brokers that won’t be able to put together a complicated financial package. Ask your client those tough questions up-front because it enables you to solve problems before they arise.
Do they have a guarantee?
Most loan brokers do not have a guarantee. In fact, most are scared to death to make a guarantee because they don’t want to disappoint you or your client. I do make a guarantee: your client’s loan will be processed in less than 21 days or less, assuming the client has provided me with all the required details (which you can see in the next chapter).
By this point you’ve qualified some of the mortgage broker’s basic information.”
Understand How Mortgage Officers Are Paid
Know what your mortgage broker’s fees and rates are. The payment model differs from each individual mortgage broker. Some are paid on a percentage of the mortgage they get you. Others are paid on fees. Others are paid a straight-fee commission upon closing any mortgage. Make sure you ask for a detailed outline of their payment structure so you can truly understand.
Have They Shown You Options?
As I mentioned at the beginning of this article: the advantage of having a mortgage broker is the amount of options they can provide you. A sign of a bad broker is one who gives you very few options or attempts to pressure you into a commitment. You’ll want to look for brokers who ask lots of questions. The deeper they dive into your financial records, your goals, your marital status, bank statements, credit scores, etc — the better! All of those answers will help them help you. If they are not diving deep, they likely aren’t a good match.
Step #3: Choose The Right Fit
Now that you’ve compiled your list and qualified them, now you’re ready to make your choice., have compared information or met with a financial advisor, you are ready to make your decision on a mortgage broker. Remember to choose a broker that is both professional, involved, and gives you confidence in your decision.
Do you trust them?
Did they help you understand the mortgage process.
Were they exact and thorough?
Did they take an interest in your goals?
Do you collaborate well?
Do they have experience doing complex deals?
Compare your options and make your choice.
That, my friend, are three steps that will help you choose the right mortgage broker.
If you’re thinking of buying a home and you would like a
$500 free 30-minute consultation with me, where I’ll answer any questions you may have about the mortgage process, book an appointment in my calendar here: https://www.kirkjaffe.com/get-approved-consultation/