Eye On Mortgage: Finding the Right Mortgage Broker for You

In each province, there are thousands of mortgage brokers. How do you know which one to choose so that you will end up at the closing table on time with the interest rate, loan terms and fees promised to you? Here are some tips and data that hopefully will give you the information and tools needed to find the right mortgage broker, how to work with them, and to help minimize the risks before you get to the closing table.

First, let's eliminate some of the ways borrowers typically choose a mortgage broker. This may just remove most of the problems before they occur.

How Not to Shop for a Mortgage

As a lot of people do, you could go to the Internet and call the first few mortgage brokers that pop up, check the local Sunday Real Estate Section to see who has the best rate, or call someone from out of the Yellow Pages. However, these should be defined as ways NOT to shop for a mortgage:

Searching On-Line

Almost every mortgage broker is listed on the Internet. While it is a great resource, it is not the best way to shop for a mortgage. It may be obvious to some, but just because a mortgage broker's Web site shows up high on search engine listings does not mean they have the lowest rates or have the best service, or are even reputable. High search engine rankings do not speak to these factors, but rather to the fact that the webmaster who built the Web site probably spent hundreds of hours building and fine-tuning their site to show up on the Internet listings when you type in certain mortgage "keywords". Search engines do not rank listings by the quality or reputation of a broker but more by the amount of other similar Web sites that link to that Web site, the number of visitors it receives, how much the broker may have paid to be listed there, and many other factors.

There are many Web sites that list mortgage company's rates online. I don't put too much stock in sites that list these company's rates online. Typically mortgage brokers pay to be listed on those sites and some are "affiliate" sites. This means they are charged a fee when the visitor goes to the link that was clicked on. To find out if you are on an "affiliate" site, click on the link it takes you to and examine the web address. If it has a code at the end of the domain name, such as "http://www.anybroker.com/source=2519" it is generally an affiliate. There is nothing wrong or illegal about this, just realize some of the sites may be biased by the companies that pay or give an incentive to be listed on their site.

Another tip is not to waste time clicking on sponsored links. On Google, they are listed in the right column, (and recently at the top of every page in a shaded box) while AOL's links are lightly colored boxes at the top and bottom of the page and on Yahoo, they are listed in the column on the right side and at the bottom of the page in a colored box. As the name implies they are "sponsored" links which means to be listed the broker has paid to be there.

Be aware that if you complete a form on a mortgage Web site concerning wanting more information prepared to be flooded with calls or emails from mortgage brokers wanting your business. There are a lot of Web sites that are only "lead" sites. They get your information and then sell that information to mortgage brokers across the nation. Only submit information on the Web site of the mortgage broker that you know you will be working with.

The bottom line is the Internet is a great way to find out more about a mortgage broker that you are considering using but it may not be the best way to find one you can trust.

Choosing a Mortgage Broker Based Solely On Rate
The interest rate obtained on a mortgage is one of the most important factors of a loan, but it is not everything. There can be separate closing fees that can factor into the total cost of obtaining a mortgage loan.

Don't be fooled by brokers advertising that they have the lowest rates. Most mortgage brokers and lenders have about the same rate on comparable programs on any particular day.. When selecting a mortgage broker the interest rate is an important factor but let's take it a step further to get a better picture of the total cost to you.

Where to Start

When you are looking for any type of professional service person, accountant, dentist, etc, who do you turn to? People typically ask the opinion of someone they trust, be it family, friends, neighbors, co-workers, attorneys, accountants,s or other professionals. The referral method can also be used to help find a mortgage broker.

Make a list of 10 people (who have a mortgage) and ask the name of the broker they worked with. Be sure and get the name of the person they worked with. Keep in mind that service between one broker and another can vary widely so you will want to contact that specific person, not just anyone in that broker. Also, be sure to ask if they were happy with the rate and service they received.

Collect at least three names of loan officers or brokers or maybe even up to seven or eight. Why so many? Because it may have been a few months or years since your referral source last used this individual and it is possible that they have moved to a different company or even changed careers. In addition, not every mortgage broker is going to want to work with you concerning items that we are discussing. Also, list any brokers that you have used in the past and were happy with.

A wise businessman once told me. "Know who you are dealing with". Now that you have a preliminary list of names let's try to find out a little more about whom you are dealing with. To help with this I have put together two simple approaches:

1. Background checks

2. Making contact (Parts A and B).

Step 1 - Simple Background Checks

Don't worry, there is no need to hire a private investigator or do any "dumpster diving" to gain secret information. I do, however, suggest that you do a little investigative work. It should only take about 30 minutes and it will not cost you anything. In fact, it may save you a bundle of money and stress later in the process.

Visit the government Web site for the state in which the mortgage broker is located that you are researching. Locate the page that has a list of mortgage brokers or lenders. If the company you are researching is not listed they may be listed under a different name. Also, you may be able to search by the individual’s name.

If they are listed, it may also list how long the broker has been licensed (you should do business with them only if they have been in business for a minimum of two years), how many loans they have closed in the previous year, how many employees they have, and if they have had any consumer complaints made against them, administrative fines levied or regulatory orders (such as "cease and desist" orders) placed on them, any of their employees or broker. Be sure to search under the individual’s name Checking with the Better Business Bureau may give you some additional information but in my experience, most mortgage brokers and lenders are not members of the BBB.

Find their Web site and read about them. Do they post their rates and update them daily? Do they offer informative articles or information? Read their bio's, Mission Statement, and Privacy Policy to try to get a sense of what they are about, what they stand for, and their vision of how they conduct their business. In addition, look for membership in professional associations, awards, etc. If they do not have a Web site I would not deal with them.

There are also local mortgage associations. I would give credit to the broker for being a part of a group that offers ongoing education and sets goals of ethical standards to their members.

Look on the company Web site to see if they are a member of any of these mortgage organizations or other trade associations. However, keep in mind that just because you see one or all of these logos or references on their Web site, does not mean that the person you are working with holds the designation or is a member of that association.

Here is a recap of information to research as you are narrowing down your top candidates:

o How long in business?

o BBB complaints?

o Has a Web site?

o Rates are posted daily?

o Member of any national or local mortgage association?

o Professional designations?

STEP 2 - MAKING CONTACT

The next step is to contact the mortgage broker to whom you were referred.

Part A - Approaching the Broker

If you were referred to a specific broker try to stay with that person. If you just have a broker name or if the individual you were referred to is no longer there and you still wish to check out the brokerage, ask for the broker or manager of the company. While this may not always be possible or practical, unlike a mortgage agent, the broker does not have to split the income with anyone else. In a larger brokerage, the broker may not be able to give your loan the full attention it needs. But always start with the broker or manager and work down.

Here is a suggested way to start the conversation:

"My name is _________ I am shopping for a mortgage and am calling a few brokers that have been recommended to me to see who I would like to establish a business relationship with. I was recommended to you by __________.

Do you have a few minutes to speak?

Great, I have just a few questions:

If they agree to speak to you, briefly lay out what you are doing, including if you are looking for financing for a purchase or refinance and the loan amount. In addition, mention your credit scores or credit history, the percentage of down payment. Then ask, if they offer the type of financing you need. If the person starts to offer rates, terms etc. politely let him know that you are not shopping for the rate and product now, rather you just want to get some basic information.

Another good question to ask is how long they have been in business. (If speaking with a mortgage agent- how long they have been with this brokerage as well as how long they have been in the mortgage business.) I suggest you work with someone that has been in the mortgage business for at least two years.

The most important information is if they are a broker or lender, how long they have been in the business, and maybe if they offer the type of financing you are looking for.

Part B - The Interview

Once you have narrowed down your list of potential mortgage brokers that you may want to deal with, it is time for the interview.

Start by calling them back and let them know you may be interested in working with them and you would like to get more information. I always suggest that you meet face-to-face at their office if possible so that you can get a feel for them and their brokerage. If you can't meet with them at their office you can do it over the phone or via zoom. Be prepared with your list of questions listed below, as they may want to do the interview immediately.

When you speak with them, again mention what type of loan you will need, (purchase or refinance, conventional, construction, investment, etc.) and be prepared to go into some detail about your financial situation, including employment status, credit history, down payment amount and the source of it and a rough idea of your financial assets. Do not let them start taking an application on you. You are there to interview them, not the other way around.

Do not give out your Social
Insurance number during this interview. There is no need to do this yet as you are not going to decide on what broker to deal with until you have interviewed everyone on your list.

Questions to Ask the Mortgage Broker
Here is a list of suggested questions to ask the broker or loan officer.

Application Questions

o Will I get a pre-approval?

o Will you guarantee your estimate of closing costs? If not all at least yours?

o If my credit score affects the interest rate and/or product is it possible that you will help me raise my score to obtain a better rate and product?

o What is your approximate closing ratio for loan applications taken?

Keisha Johnson helps individuals position themselves to take advantage of great opportunities such as homeownership as well as achieve their investment potential in the real estate market.  She is a community service award winner and offers her service to the community by educating the youth about their credit and positioning themselves to take advantage of great opportunities in the future.
 
With over 10 years of experience, she has extensive knowledge that she shares with her clients during the home purchase process.  Whether they are first-time homebuyers looking to take equity out of their home, or they're ready to purchase an investment property, Keisha educates her clients so they feel empowered with information during the home purchase journey

I have also been featured in Authority Magazine, I Love Mortgage Brokering Podcast, Thrive Global as well as Bitbean online Magazine.