What to Expect from Mortgage Brokers Today
Shopping for a new home in a crazy market environment may be a daunting task. A lot of home buyers are looking for homes themselves and not seeking help from mortgage brokers.
Two years ago, about 67% of home loans are originated by mortgage brokers. When the bubble burst, their share of the market pie is down to 45%.
A lot of buyers want to look at their option themselves and compare the choices they have instead of seeking help from other people. To survive this trend, mortgage brokers must learn how to serve the best interest of their clients in the most transparent way.
Brokers have all the access to information for all kinds of loans from banks. They don’t work for the bank and can give their clients the most cost-saving deal that they can find in the market. In recent years, this wasn’t the case. Mortgage brokers pocketed a lot of commissions from banks and borrowers ended up with very costly loans.
A survey among people with 640 credit score or lower, those who hired mortgage brokers to find them a good deal ended up pocketing out $5222 more on average in first four years of their home loan than those who directly negotiated with the bank.
Amid the crisis, brokers are expected to be more transparent with their clients. Several proposals are pending on the US Congress requiring brokers to disclose fees and take care of their client’s best interest.
There are also financial institutions who are opting to negotiate directly with their clients and rid their system of middlemen. There are also websites which will help facilitate this practice in the market today.
If you are still going for a middleman for your mortgage loan, you can demand that the broker declare his fees in advance including his cut from the bank which may affect your rate and monthly fees. The total fee of the broker must not exceed 2% of the loan.