In an attempt to shed some light on little know aspects of mortgage lending, the following are some frequently asked questions that seldom get the right answer.
Q: Why should I go to a broker to get a loan when I can go directly to my local bank?
A: Because the bank pays its employees meager salaries there is usually a lot of turnover in that industry. We all know that tellers and bank personnel change constantly. Getting good refinancing advice from an inexperienced banker who was only until recently a teller does not seem to be particularly prudent. Professional loan brokers and loan officers can sit down with you and help you to find the refinance program that is right for you and your family.
Q: But wont I pay too much if I use a loan broker?
A: Sometimes you will pay a broker fee or origination points, but sometimes those fees are paid to the broker by the actual lender or investor as rebates for selling their product. Brokers get wholesale rates that many branches cant match so even if the broker adds some margin to the rate in order to get a yield-spread premium rebate, you still end up getting a better rate.
Q: Arent all mortgages the same?
A: No, there are vastly different products to choose from and which one is right for you and your family depends on your particular financial situation. When you go to a local bank you usually do not have more than two or three types of loans to choose from. Refinancing advice from bank personnel cannot be objective since common sense tells us that these employees will be selling bank products exclusively. A broker is not tied to any one bank and will usually give you many options to choose from and be able to explain the benefits of each particular program.
Q: What kind of refinancing advice can I get from a broker that I cant get from my friend the real estate agent?
A: Real estate agents have their own job and that is to help you the homeowner or buyer, buy or sell your house. Most agents cannot give refinancing advice or mortgage advice because they only know the rudimentary generalities of mortgages and home loans. That does not usually stop them however the wary borrower should take their refinancing advice with a grain of salt. Experienced brokers and loan officers are continually doing research and learning more about the business and this means that they will have more knowledge to guide you through the tricky business of home financing.
As a homeowner or borrower who is seeking refinancing advice only one thing is truly indispensable and that is common sense. Make sure that the person who is dishing out the advice has a good reputation and plenty of valuable experience.