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The 7 Sins of Mortgage Brokers
Honesty is the most important aspect of dealing with mortgage brokers. Unfortunately not all brokers are forth coming with the information that would allow you to trust them and make an informed decision about the deal they recommend. Don?t get me wrong not all mortgage brokers are bad. Just don?t underestimate the influence that commission has on their recommendations. And, as always there are bad eggs in every industry.
Being aware of the following broker sins will help you pick a trustworthy broker and make sure they get the best deal for you. Most importantly, don?t be afraid to ask questions.
Sin 1: Favouring their loan product.
You need to be aware if the mortgage broker is also a lender, i.e. do they have their own loan products? If they do, and they offer there own product, there needs to be a clear, understandable reason why their product is the best choice for your situation.
Sin 2: Being influenced by commission.
Brokers get commission from the lender you end up borrowing from. You need to ask if the broker has special incentives for referring you to a specific lender i.e., do some lenders pay more commission? If so, this may lead them to be biased about which lender they recommend to you. They may be inclined to recommend you to the lender that pays the most; regardless of whether this is the best choice for you.
So again you need to be given a clear and understandable reason why the product and lender is the best choice for your situation. You also need to find out how big a range of lenders the broker deals with. They can?t claim to find you the best loan product on the market for your needs if they only deal with 20% of lenders on the market.
Sin 3: Hiding the real cost of the mortgage.
Make sure the broker provides you with the comparison interest rate, when looking at or comparing any home loan products. The comparison rate shows you the real cost of a home loan by taking into consideration all the foreseeable fees and charges associated with the loan. This is so you can easily compare home loan products.
Sin 4: Withholding information.
Know the whole deal. You need to know the whole service provided by the broker. Do they provide ongoing service and assistance after you secure your loan? If so, find out for how long. Also, what are the fees involved? Theirs and the lenders. All this needs to be made clear before any papers are signed.
Sin 5: Allowing client ignorance.
Make sure you understand what the benefits and the drawbacks are for you. You need to have it explained to you in a clear way so you can understand it. This is so you can weigh it up and decided for yourself if refinancing is actually in your best interest. There is a bad practise in the mortgage broker industry called churning. Churning is the act of refinancing for the sake of commission even though there are no benefits for the mortgage owner. Making sure you understand the benefits and drawbacks of the refinancing deal yourself will make it impossible for you to fall victim to this practice.
Sin 6: Being Uninsured
Do the brokers have their own professional indemnity insurance? This protects professionals against liability claims resulting from negligent work. All lenders will have it. However the brokers should not assume they are covered by the insurance of an umbrella organization. The broker needs to know for sure if they are or are not protected.
Sin 7: Being Unqualified.
Is the broker qualified to give you lending advice? In every country there are reputable authority organizations that provide mortgage brokers with credentials, provided they undertake certain courses. Find out who these organizations are and make sure the broker you?re dealing with is a member or has been given credentials.
Mortgage Loan Lead
If you are a loan officer or mortgage broker looking to purchase mortgage loan leads, you may be considering what type of mortgage loan lead to purchase, and which company to purchase them from.
There are a few different types of leads to choose from and literally hundreds of lead companies to buy them from.
A few different types of the mortgage loan leads you can purchase would be ?real time? leads, which are only seconds old by the time you receive them. There are also the old or recycled leads which you can receive relatively cheap and usually in bulk.
Be careful with the recycled leads because you can guarantee that they have been through many loan officers before they have reached your desk, so don?t be expecting much on the quality end of these leads.
Than there is the live transfer lead where the prospect is transferred to you from a representative of the lead company once they have made contact. Just make sure you are available to take the call.
Once you have decided which type of lead is best for you, it comes time to decide on which lead company to invest in.
My suggestion to you would be to call and speak with someone in customer service. Get a feel for how they obtain their leads and how they deliver them, as well as gathering information on their return policy.
If you are unable to reach anyone in customer service, or they are not clear on their answers to your questions, than it is time to move onto the next lead company.
Remember, you work hard for your money, and if you feel as though the quality of the customer service is not good or meeting your expectations, than most likely the quality of the leads will not be good or live up to your expectations.
The VA Home Loan Program For Military Veterans
the federal government offers many benefits to men and women who serve their country. one of those benefits is the va home loan program. the va home loan can be used to purchase a new home or refinance an existing one and is available to all honorably discharged veterans and active duty military. the department of veterans affairs (va) does not actually lend out money but they guarantee or insure the funds that are loaned to you by a va approved financial institution. you can go to any bank or mortgage company that participates in the va loan program to apply.
the va home loan offers several advantages over a conventional home loan. one ofthe most significant benefits is that va loans do not require a down-payment. as of january 1st, 2006 you can buy a home for up to $417,000 with no down-payment. while there are some conventional no down-payment home loan programs on the market, you will have to pay a higher interest rate for the privilege. not so with a va loan. you pay the same market rate whether you are making a 10% down-payment or $0 down-payment. in addition, you will find that in most cases the va interest rate is comparable with or even lower than conventional loan rates.
another great benefit of the va home loan program involves the loan closing cost. while va does not require the veteran to make a down-payment, there are still loan closing cost as with any home loan program that the borrower incurs. closing cost usually average 3-5% of the loan amount. va, however allows the seller to pay all of your loan closing cost up to 6% of the loan amount. compare this to a 3% maximum seller contribution for most conventional loans. so with a va home loan it is possible for a veteran to buy a home for up to $417,000 with no down-payment and without having to pay any closing cost. talk about using the power of other peoples money to increase your net worth!
va home loan participants also enjoy the luxury of not having to pay mortgage insurance. in contrast, with a standard conventional loan you will have to pay mortgage insurance if you put down less than 20% as a down-payment. mortgage insurance can add a significant amount to your monthly payment so not having to pay this is really a plus to borrowers who use their va loan benefit.
the department of veterans affairs does charge a va funding fee to all non-exempt users of the va home loan program. the va funding fee is currently 2.15% of the loan amount for first time va loan users and 3.3% for subsequent users who do not make a down-payment. this fee is added to the loan amount so the veteran borrower does not have to pay it out of pocket at closing. if you are a veteran with a va rated disability and are receiving a monthly benefit then, in most cases, you will be exempt from having to pay the va funding fee.
if you are eligible for a va loan and are in the market for a new home that is within the va lending limits then the va loan should be your 1st choice when considering your financing options. it offers tremendous benefits over a conventional loan and can make you a homeowner with zero or little outlay of cash. if you would like more information on the va home loan program or are an eligible veteran and want to get pre-approved for a va loan visit 1st metropolitan mortgage at http://www.freeroller.net
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