Some homeowners my feel the need for assistance in home mortgage Refinance shopping process. There are a few terminologies and terms they may not be familiar with and the choice offered might overwhelm them. Many mortgage applicants employ a mortgage broker for several other good reasons as well. Most mortgage brokers earn every penny they are paid with their ability to find and negotiate best deals for their clients. Their knowledge of the mortgage industry is undeniable.
However, the system is open for manipulation. Mortgage brokers have clear incentives to choose one lender against another regardless of their clients’ interest. The biggest problem is that brokers are paid by both parties. Home loan applicants pay a good 1%, as well as the lender incentives. A lender looking for more business would naturally offer better payouts to brokers to entice them choosing their products. Therefore, a mortgage broker is not entirely working for a home loan applicant. As they are paid by both parties they have two employers. And who could blame them for wanting to earn even higher commissions?
You would think what is the harm in that if the lender chooses to pay them commissions as well? Unfortunately, it is not that simple. Only the broker knows the real reasons why he is pushing certain mortgage product in favour of others whom may be offering better deals (but less commission to the broker). It does not end there either. A mortgage broker who has got a 5% refinance interest rate offer for his client is able to try to sell 5.5% rate to his client. For every 0.25% they mark up the rate they are paid 1% fees from lenders. How would you feel now when you find out that your mortgage broker is being paid $1000s from your prospective lender?
The good thing is that they have to disclose the fees they receive from lenders. Whatever they are called, it is your right to question those excessive fees. It might be that you though you were paying only 1%, but you are in fact paying as much as 3% to your advisor. Mortgage lenders have been doing it for 100s of years to know better not to pay a penny more than they should without a return on it.
Most brokers would take the moral high ground on those offers. They have their reputation on the line. After all, most of them serve their immediate community. Nevertheless, I do not know about you but somehow I would not bet on that. It is up to you to be well aware of going mortgage refinance rates, to spot any tricks anyone trying to pull on you. You have no excuse not to when you can fill a simple form and get up to 5 mortgage quotes from different reputable lenders in minutes.
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