Pros and Cons of Dealing with Mortgage Brokers
As with any lender, you have to weigh the strengths and weaknesses of a mortgage broker's services. Here are a few:
Pros
Mortgage brokers can help people find loans with less than a 20 percent down payment.
Mortgage brokers can find loans for people with less-than-perfect credit.
Cons
Customers need to be vigilant about how fees are charged. You might end up paying more for a loan that doesn't give you what you need.
Some mortgage brokers steer to a particular lender or group of lenders. It's a good idea to ask which lenders a broker works with before you start working with them.
This may sound like harsh criticism against mortgage brokers, but the best ones will welcome the scrutiny — and better still, they'll provide answers.
Remember, the mortgage broker isn't going to be pocketing monthly interest from your loan because she's not lending you the money. Instead, the bulk of her income is based on fees.
These fees include appraisal and credit inquiry expenses, application processing fees, closing costs including notary services, document preparation, escrow services, title insurance, and recording fees. You should also know that many of these costs are based on the amount of the loan, so when you borrow more, you'll pay more.
