Wednesday, March 14, 2007

Mortgage Brokers - Should You Use One?

Mortgage brokers have become more popular for consumers to work with than ever before. Rather than do the research, and investigating of available mortgage loan options themselves, many are choosing to let a mortgage broker do the leg work.

What exactly does a mortgage broker do, and what are the advantages and disadvantages of working with one?

It's very simple really; mortgage brokers find, and acquire loan money from lenders, tack on a little something for their time and trouble, and then sell the loan money to the borrower. They are the consummate middlemen in the mortgage loan process.

Now, you might be asking yourself why use and have to pay for a middleman when with a little effort you can do this yourself?

Let me try to explain.

Say for instance, you are looking to buy a new washing machine. You shop around visiting the major washing machine manufacturers that are accessible to you, such as Whirlpool. You have looked at a number of different models, but overall what you have seen is not that impressive. You can't seem to find one that offers all of the different features you want.

As a result, you find yourself going to a large consumer products retail store. Best Buy offers Whirlpool washing machines too, but they also offer various types of washing machines from a variety of other manufacturers. Having access to many different types of washing machines all in one place, makes Best Buy your best bet to find a washing machine to fit your specific needs.

Similarly, by going directly to the lender they will have access to only their products, which may or may not be the best product to meet your needs. However, should you go to a mortgage broker with access to many different lenders, and who by the way, is considerably more familiar with the lenders and their products than you could ever be, there is a strong chance you will be able to find just what you are looking for in a mortgage loan. The advantages of dealing with a broker are especially valuable to borrowers who are searching for something other than the standard ARM, or fixed rate mortgages.

Another terrific benefit offered by a mortgage broker is the fact that they will take care of all the necessary paperwork for you. And should you have any questions, the broker will be much easier to contact than a loan officer.

Is there a downside? There can be. Because there is very little regulation at both the state and federal level, a dishonest broker may give you a bad deal. You can virtually eliminate this risk by getting a mortgage broker recommendation from your local Better Business Bureau, your states Real Estate Commission, perhaps even your lawyer, or banker.

Copyright 2007 Carl DiNello

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