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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