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What your Mortgage Broker Doesn't Want you to Know


Finding your dream home is always important, but at the same time it can be equally important to find your dream mortgage. After all, unless you have a massive down payment saved up, chances are that you are going to have your mortgage for quite some time. When shopping around for the ideal mortgage, there are a few things that you need to be aware of that your mortgage broker probably isn't going to tell you.

As you begin the process of shopping for a mortgage, one phrase that you are likely to hear often is that you need to lock in your interest rate right away. One thing to keep in mind when you hear this; is that mortgage brokers always work on a commission basis. What this means to you is that mortgage brokers want to do everything they can to keep you from looking around. The mistake that many homebuyers make is to feel panicked when they come across a good rate and rush to 'lock' it in before they lose it. It is true that interest rates are currently lower than they have been in decades, but that doesn't mean that you need to feel rushed to lock in a rate.

The truth of the matter is that even experts are not certain what is going to happen with rates. As a result, you should certainly be wary if a mortgage broker claims they have an inside track on what is going to happen with rates tomorrow. As a general rule of thumb, interest rates fluctuate on a daily basis. Whenever the stock market has difficulties, you can expect rates will decline slightly. At the same time, rates also tend to rise whenever the stock market is doing well.

While your interest rate is definitely important, so are the fees you pay for your mortgage. In fact, those fees that mortgage brokers sometimes slip in while you aren't looking can be so important that it can sometimes be worth it to take a mortgage with a slightly higher interest rate if it comes without a lot of the extra fees. Unfortunately, many buyers are so focused on finding the lowest possible interest rate they pay little attention to the fees they will pay. Some fees are quite standard, such as documentation fees, appraisal fees, etc. While those fees may be common, a mortgage broker can also slip in origination fees. These are the fees the broker is paid. One way to help avoid paying such high fees is to spend some time shopping around for your mortgage and carefully reviewing Good Faith Estimates before you agree to anything.

Clearly, shopping around is important but shopping around the proper way is also important. One of the most common mistakes that many buyers make when comparing mortgages is shopping online or with multiple brokers; each of which pulls their credit to check it. This can prove to be a serious problem when you are trying to buy a home because the more often your credit report is pulled, the lower your credit score will be. In the end, this can seriously impact the approval process for your new mortgage loan.

Most consumers never realize it, but the interest rate you receive has a direct connection to your credit score. The best way to avoid negatively impacting your mortgage loan application is to have your credit scores pulled only once and have that information provided to the mortgage brokers that are providing you with quotes. Keep in mind that mortgage brokers should always request your permission prior to pulling your credit report. Unfortunately, there are many unscrupulous brokers out there that assume when you give your social security number, you are in turn giving them permission to pull your credit. Brokers do not actually need your social security number in order to provide you with a quote.

Finally, remember that there is an important difference between pre-qualifying and receiving your final interest rate and approval. Your mortgage broker will still need to pull your full credit report once again before the day of closing. They will also need to completely review your income as well as your assets and liabilities before they provide you with a final approval for your mortgage loan. Do not make the mistake of assuming that just because a broker has pre-qualified you that this means your mortgage loan is in the bag.


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