Knowing how to spot bad mortgage brokers can save you from an expensive loan and unnecessary expenses when buying a home. Mortgage brokers are professionals who work with lenders on your behalf to find you the best deal for a mortgage. Brokers can be a great asset when you are shopping for a home loan because the terms with the lender are negotiated for you. However, a bad broker can waste your time and ruin your dreams of home ownership.
The broker is offering unbelievable loan terms. A two percent interest rate for the entire life of the mortgage sounds great, but chances are a loan with that low of a rate is an adjustable rate mortgage (ARM), meaning your payments can easily double when the loan resets. The broker should fully disclose the positives and negatives of each loan you are offered.
The broker asks you to lie on the loan application. Even a slight alteration in numbers to get you a mortgage is fraud. You're legally on the hook if the false information is discovered, and you can be subject to fines and loss of all the money you paid in loan fees.
You are being pressured by the broker to get a mortgage. A mortgage loan is a huge commitment, and a professional broker will patiently work with you to find the loan you need.
You don't know any of the fees. The broker should provide you with costs of closing your loan in writing before you sign. A broker who will not disclose fees can be hiding something about your loan, such as a high origination fee.
- The broker won't answer your questions in a professional way. Your questions about all aspects of the loan should be answered by the broker in a complete and straightforward fashion. A broker who will not answer questions or is evasive can be withholding important information from you.
You should feel comfortable with your broker. Asking your broker questions should not make you feel like you have no clue what you're doing, even if that is the case. You'll know you've found the right broker when you feel like you're being tutored about mortgages by the cool kid and not the teacher that always called on you when you didn't know the answer.