The 7 Sins Of Mortgage Brokers

The 7 Sins of​ Mortgage Brokers
Honesty is​ the​ most important aspect of​ dealing with mortgage brokers .​
Unfortunately not all brokers are forth coming with certain information that would allow you​ to​ trust them and make an​ informed decision about the​ deal they recommend .​
Don’t get me wrong not all mortgage brokers are bad .​
Just don’t underestimate the​ influence that commission has on​ their recommendations .​
And,​ as​ always there are bad eggs in​ every industry.
Being aware of​ the​ following broker sins will help you​ pick a​ trustworthy broker and make sure they get the​ best deal for you​ .​
Most importantly,​ don’t be afraid to​ ask questions.
Sin 1: Favouring their loan product.
You need to​ be aware if​ the​ mortgage broker is​ also a​ lender,​ i.e .​
do they have their own loan products? If they do,​ and they offer there own product,​ there needs to​ be a​ clear,​ understandable reason why their product is​ the​ best choice for your situation.
Sin 2: Being influenced by commission.
Brokers get commission from the​ lender you​ end up borrowing from .​
You need to​ ask if​ the​ broker has special incentives for referring you​ to​ a​ specific lender i.e.,​ do some lenders pay more commission? If so,​ this may lead them to​ be biased about which lender they recommend to​ you​ .​
They may be inclined to​ recommend you​ to​ the​ lender that pays the​ most; regardless of​ whether this is​ the​ best choice for you​ .​
So again you​ need to​ be given a​ clear and understandable reason why the​ product and lender is​ the​ best choice for your situation .​
You also need to​ find out how big a​ range of​ lenders the​ broker deals with .​
They can’t claim to​ find you​ the​ best loan product on​ the​ market for your needs if​ they only deal with 20% of​ lenders on​ the​ market.
Sin 3: Hiding the​ real cost of​ the​ mortgage.
Make sure the​ broker provides you​ with the​ comparison interest rate,​ when looking at​ or​ comparing any home loan products .​
The comparison rate shows you​ the​ real cost of​ a​ home loan by taking into consideration all the​ foreseeable fees and charges associated with the​ loan .​
This is​ so you​ can easily compare home loan products.
Sin 4: Withholding information.
Know the​ whole deal .​
You need to​ know the​ whole service provided by the​ broker .​
Do they provide ongoing service and assistance after you​ secure your loan? If so,​ find out for how long .​
Also,​ what are the​ fees involved? Theirs and the​ lenders .​
All this needs to​ be made clear before any papers are signed.
Sin 5: Allowing client ignorance.
Make sure you​ understand what the​ benefits and the​ drawbacks are for you​ .​
You need to​ have it​ explained to​ you​ in​ a​ clear way so you​ can understand it .​
This is​ so you​ can weigh it​ up and decided for yourself if​ refinancing is​ actually in​ your best interest .​
There is​ a​ bad practise in​ the​ mortgage broker industry called churning .​
Churning is​ the​ act of​ refinancing for the​ sake of​ commission even though there are no benefits for the​ mortgage owner .​
Making sure you​ understand the​ benefits and drawbacks of​ the​ refinancing deal yourself will make it​ impossible for you​ to​ fall victim to​ this practice.
Sin 6: Being Uninsured
Do the​ brokers have their own professional indemnity insurance? This protects professionals against liability claims resulting from negligent work .​
All lenders will have it .​
However the​ brokers should not assume they are covered by the​ insurance of​ an​ umbrella organization .​
The broker needs to​ know for sure if​ they are or​ are not protected.
Sin 7: Being Unqualified.
Is the​ broker qualified to​ give you​ lending advice? in​ every country there are reputable authority organizations that provide mortgage brokers with credentials,​ provided they undertake certain courses .​
Find out who these organizations are and make sure the​ broker you’re dealing with is​ a​ member or​ has been given credentials.

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