Foreclosure How To Buy

Mortgage Brokers - Their Fees And Commissions

Mortgage brokers have one reason for being: to earn a commission when they get you approved for a mortgage. Almost every licensed mortgage broker works only on commission; very few have jobs where they receive a salary and work only for one particular lender.

When you sit down with a lender, the person who helps you with your original paperwork is not a mortgage broker. He is simply a loan advisor who doesn’t need a license, is probably on commission as well, and can’t offer you much in the way of advice. He merely looks at various charts on his desk to determine current APRs, he can talk about locked in rates and time frames, and he can probably provide information on exactly what type of backup documentation will be needed and when.

Actually, a mortgage broker doesn’t do much more than the loan advisor. His goal is to get you interested in what he has to offer so that he can get you to fill out an application and get your credit report. Chances are, even if you tell him you have awful credit and little money, he will promise you that he has lenders who’d love to do business with you.

On the other hand, aside from the mortgage, your purpose is to make sure your credit report is pulled only once or twice. The more often your credit report is pulled, the lower your FICO score. It takes a hit with each inquiry, and when you have multiple lenders looking at your credit history, there is an assumption by each successive inquirer that previous lenders turned you down - and whether it’s true or not, it is detrimental to your score.

No matter what he says to you, a broker is nothing more than one more person who is standing between your paperwork and your final approval. He is a middle man. He has no authority to do anything for you other than give you messages from the lender who might need more information, etc.

Brokers can charge virtually any kind of commission. They work for themselves and their fees aren’t dictated by anyone. Usually they work under a company name, even if they work all by themselves. If you ask what they charge because you want to compare deals out there, you’ll never get a straight answer. They will talk about percentages, difficulty in funding sources, timeframes, and some even will even tell you they are told what they have to charge by the lender.

A commission can cost you thousands of dollars but you won’t find out until you get your first copy of your HUD statement. One of the tiny line items on the form shows the commission the broker plans on charging you. Ask him up front what he plans on charging, and you’ll never get a straight answer. He might even tell you that is forced to charge whatever the lender tells him to. However, the lender has nothing to do with this fee. They don’t care. His commission is paid by you, not the lender, at closing.

Do they deserve some of these commissions? It depends. Some brokers do provide a lot of useful information, and are very helpful during the entire process. Others fall off the face of the earth as soon as the application is submitted and won’t even return phone calls. Even if you’re finally approved, they’ll still charge you a fee!

When searching for a mortgage broker, it is crucial to do the maximum amount of investigation. The following is a very good resource for Peoria mortgage brokers. Financing a home may be very complicated and perplexing to some people. See the following source of information for mortgage brokers in Joliet Illinois.

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