Mortgage brokers makes the process of finding mortgage information easy but it is important to select the right mortgage brokers by asking tactical questions or otherwise best mortgage deals will remain abstract. So, when you are shopping around for cheap mortgages, you should keep in mind that taking advice from any one source such as building society or bank will give results available within financial institution whereas it is vital to look for a source of information to cover all avenues.
Before making commitment to any lender, you should ask some questions and if you are not satisfied with the answers you receive, you can continue shopping for a loan till you find the best mortgage broker or lender, a mortgage broker with whom you feel comfortable. You can begin with asking him the best loan available for you. Reputed mortgage broker will first gather enough information about you before suggesting any type of refinance home loan. You should ask lender to explain pros and cons about various loans available including fixed rate loans, adjustable rate loans, negative amortization loans, and interest only loans.
You should also ask about interest rate and annual percentage rate (APR). APR is derived by complex calculation including interest rates and other related broker fees divided by the term of loan. However you should be careful as many mortgage brokers do not compute APR correctly. It is also required to discuss discount points and origination fees with the lenders. Many a times brokers do charge origination fees apart from points, more points you pay lesser will be the interest rate. All the costs are also to be mentioned while selecting a mortgage broker as all the costs of a loan includes fees that go into lender's pocket and also third-party vendor fees like appraisal, lender's title policy, taxes, recording fees and credit history.
The mortgage lender should guarantee GFE (Good Faith Estimate). As per Real estate settlement and procedures act (RESPA), lenders have three days to give GFE after you have applied for loan, containing all the costs of your loan. Here you should consider some points like lenders won't guarantee GFEs, this document is value about the cost on which it is printed. Although there is a lot of pressure on the lenders by consumers to guarantee GFEs but if your lender refuses to stand behind his estimate, it would be better to look for another lender. Also ask him if he offer loan rate locks. Ask your lender if he will charge a fee to lock interest rates and for how long this lock rate lasts.
Since prepayment penalties are no longer allowed, therefore you should ask your lender about the prepayment penalty, its terms of prepay and whether it will be applied if you refinance through him at a later date. Also see whether he is equipped to approve loans In-house and by how much time he will take to fund. Last but not the least, you should discuss about yield Spread Premium as these sometimes become controversial matter.
By now, you would have understand what sort of questions you should ask a prospective mortgage broker and if you are not comfortable with them personally or with regard to advice they give you, you are free to walk away and take your business somewhere else.