Finding A Good Mortgage Broker

1. Which Type of Loan is Best?

If we hadn’t already done this for you, this article gives you some tips on finding a good mortgage
broker. Remember that a reputable lender will find out more about you before throwing out loan options. You wouldn’t expect a doctor to suggest surgery before she assessed your medical situation, would you? Choose a lender who gathers enough information from you before she suggests a certain type of loan and make sure you tell them the truth. Don’t be afraid to ask a lender to explain the pros and cons about:

2. What is the Interest Rate & Annual Percentage Rate

On most loan documents you are going to see the letters APR, it is derived by a complex calculation that includes the interest rate and all the other related lender fees divided by the loan’s term. However, bear in mind that:

Many lenders do not compute APR correctly.
There is no way to accurately compute an APR rate for an adjustable loan.
It does not account for early payoffs.

If you are considering an adjustable loan, ask your mortgage broker

Adjustment frequency( monthly, quarterly, yearly, every 3 years)
Maximum annual adjustment
Highest rate (Cap)
Index
Margin

3. What are the Discount Points and Origination Fees?

Points are equal to 1 percent of the loan amount. Therefore, 2 points on a $100,000 loan cost $2,000, pretty easy right. And they need to be discussed and will be with a good mortgage broker in the very beginning of discussing different loans that are available to you.

4. What Are All the Costs?

Federal law makes it mandatory that a lender provide for you a GFE(more below) It will include the costs of a loan include not only fees that go into the lender’s pocket but also related third-party vendor fees such as:

An estimate of these fees constitutes the Good Faith Estimate or GFE, which the lender is required by federal law to give to you.

5. Will the Lender Guarantee the GFE?

According to the Real Estate Settlement and Procedures Act (RESPA), lenders have three days after you’ve applied for a loan to give you the Good Faith Estimate, containing all the costs of your loan. They call this a GFE and it had better be almost exactly the same as the actual HUD statement that they produce for the loan closing, if it isn’t there are some questions that need to be asked and answered and your good mortgage broker will handle them for you.(Go to resources and select mortgage broker)

6. Do You Offer Loan Rate Locks?

All interest rates can fluctuate and change daily. If you have reason to believe that interest rates are moving up, you might want to lock your loan. Lenders typically charge zero to one point to lock a loan rate and points. A good mortgage broker will let you know if you are in jeopardy of losing a good rate and may suggest tying it up.

7. Is There a Prepayment Penalty?

In some states, prepayment penalties are no longer allowed or legal. Typically, prepayment penalties let the lender collect an additional six months or more of “unearned interest” if you pay the loan off early through a refinance of sale of the property.

8. Are You Equipped to Approve Loans In-House?(Most mortgage brokers aren’t)

Underwriters review loans and issue conditions before approving or rejecting a loan.

9. How Much Time Do You Need to Fund?

Most loan processing time periods fall between 21 and 45 days. To properly write a purchase contract, you will need to include a closing date, and that date should be coordinated with your lender.

10. What is the Yield Spread Premium?

If your mortgage broker is receiving a yield spread premium (YSP), a commission paid directly by the lender to your representative, this fee will be disclosed on your settlement statement at closing. YSPs are a controversial matter because it is a little known fact that they even exist.