How to Compare Mortgage Brokers

Friday, June 25th, 2010 at 8:32 am  
Comments (1)

Choosing the right mortgage broker is important, as you want to make sure you save as much money as possible on the mortgage loan that you take out. Being picky about your mortgage broker is more than just a matter of trying to save a few dollars, though – the right mortgage broker will also help ensure that you get the best loan terms available to you, and that you will have someone that you can work with should any changes need to be made to your mortgage loan’s terms. Comparing mortgage brokers is not difficult, but it does require that you have a basic knowledge of what to look for in the mortgage loans that the different brokerages offer to you.

It is important that you understand exactly what a mortgage broker is, of course; unlike a traditional bank or mortgage lender who will offer you a mortgage loan directly, a mortgage broker will pair you with a lender that meets your needs and will act as an intermediary between you and the lender. Because of this you can often get a better deal on a mortgage through a broker than you would be able to directly, since they can do the “shopping around” for you. Different mortgage brokers may offer different rates and terms on the loans that they find for you, however, so it is still important to shop around and compare brokerages before choosing the one that is best for you.

Before you start to compare mortgage brokers, take the time to research the basics of mortgage loans online. Not only will this give you some useful information that can be used as a basis for your comparisons, but you may also be able to learn about mortgage options that you did not know about previously. This does not mean that you have to learn everything that there is about mortgage loans, of course; simply try to cover the basics of loan options, opening and closing costs, and interest rate plans. You may also wish to take the time to find out what the average interest rates in your area are as well as nationwide so that you will have a better idea of how good of a deal the rates that you are being offered are.

Once you have a basic grasp of the mortgage lending process, start looking for mortgage brokers who operate in your area. You should be able to find several using your local telephone directory or internet listings. The more mortgage brokerages there are in your area then the greater your chances will be of finding a good deal on the mortgage loan that you take out, since you will have a number of different options to choose from. Begin contacting each of the brokers that you find and request average interest rate and loan term quotes from each.

When you have collected quotes from a number of different mortgage brokers it is time to begin your comparison. Sort the quotes by the interest rate that is being charged, but make sure that interest is not the only factor that you look at. In addition to the interest rate that you have to pay there may be a number of other costs which can affect how good of a deal a particular mortgage is, and the terms of one mortgage offer may not be as flexible as those of another. Sorting quotes based on interest will at least give you an idea of where the various offers stand based on one of the most obvious factors of the mortgage, however, and can also make it easy to eliminate the offerings of any broker whose rates are much higher than the others.

You may also list the points next to each loan’s interest rate. Points are a percentage of the loan you pay either at closing or rolled into the mortgage principal that acts as a “buy down” of the interest rate. For example, a rate that is 1% lower than a comparable loan may have 1 to 3 points attached to it whereas loan number two has zero points. Depending on the amount you are borrowing, one of these loans may be less expensive than the other. Your particular situation will determine which has the lower overall cost.

Begin comparing the quotes that you have received based on the estimated monthly payments you will have to make, opening and closing costs, and any specialized terms or conditions that certain mortgage quotes might have. Read through the quotes of the mortgage brokers several times to make sure that you have all of the information that you need for your comparison, and begin removing quotes from consideration when you find them to be more expensive or to have more strict terms than some of the other quotes. Continue reducing your potential mortgage loan quotes until only two or three remain so that you can compare them more closely before choosing a mortgage broker. Once you have finished the comparison you should have an idea of the broker who will find you the best deal on your mortgage so that you can then begin the process of getting the exact loan that is right for you.



By: Shawn Thomas

Related Posts:

The Fundamentals Of Mortgage Rates

Tuesday, November 24th, 2009 at 6:17 pm  
Comments (3)

What makes mortgage rates fluctuate? They are talked about so often that you would think this is common knowledge. But the simple truth of the matter is, most people do not even know how these rates work! Among the many entities that people think are the cause of their movement are the Fed, the economy, inflation, the President, etc., etc. The real answer is that rates are moved by a number of factors, one of them being, well, you!

The Money Tree

Money for mortgages comes from a variety of different sources. Some of it comes from banks and brokerages, but a lot of it comes from investors in the capital markets. Bonds buyers come to these markets looking for good buys. Sellers of these bonds must compete with each other to get the money of these buyers. They do this by offering varieties of the investment instrument which differ with regard to risk structures and returns over time. These products also compete with other investment instruments like U.S Treasuries, corporate bonds, foreign bonds, etc.

Investor demand moves mortgage rates. They have plenty of places to put their money. Their choices directly affect the movement of rates. In a crowded marketplace, mortgages must be considered attractive enough to invest in. Of course, it is not really as one-dimensional as it may seem. Mortgage rates are affected by any number of factors in the capital markets alone.

The Other Things

Other investments also affect mortgage rates. For example, there is a very direct relationship between mortgages and U.S. Treasuries. Another factor includes “volume” available. Unlike other investments, no one can really tell how many mortgages will be on the market at any given time. Drops in interest rates produce large buildups of loans. This means that the supply of bonds goes up in a relatively short period of time. Investors cannot absorb this at once. Oversupply with little demand devalues the investment instrument.

There are also time problems when it comes to mortgage pricing. It takes hours or days for prices changes in capital markets to get to wholesalers or retailers. Also, not all of the changes are fully reflected in street prices. Depending on the fluctuation, rates may remain static. Another example is when a minor increase in bond yields is followed by a reduction later in the day and does affect the mortgage rates at all. Inflation also plays a large role in fluctuations.

All this is an obvious oversimplification of a very deep topic. You would do well to read up some more on this. This is especially true if you are thinking of obtaining one or getting a new one. You must be armed with the right knowledge to make wise business decisions. That is the only way you will ever show a profit in the end. Wise business decisions are based on what you know. So improve what you know by reading and consulting people. In the end, your bank account will thank you for it.

By: Rony Walker

Related Posts: