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What are the extra costs that we need to look for when dealing with a mortgage broker. I'm getting a good rate through broker on 30 year conventional loan. PMI with broker seems to be 30 bucks more than the direct lender. What else?
What are the extra costs that we need to look for when dealing with a mortgage broker. I'm getting a good rate through broker on 30 year conventional loan. PMI with broker seems to be 30 bucks more than the direct lender. What else?
Ask him/her for a "good faith" estimate. It will show you all costs associated with the loan and closing.
Ask him/her for a "good faith" estimate. It will show you all costs associated with the loan and closing.
Agreed. This way you will be able to tell what it will cost you approximately. I tend to recommend mortgage brokers versus going direct because clients always have questions and when going direct, you will almost always never get all your questions answered. Also for first time home buyers that have a million questions, this is a better route for them to go with. The mortgage broker (goods ones at least) can explain the whole process of what will happen and what everything means.
What are the extra costs that we need to look for when dealing with a mortgage broker. I'm getting a good rate through broker on 30 year conventional loan. PMI with broker seems to be 30 bucks more than the direct lender. What else?
There should be no extra cost using a broker. They get paid by the lender.
Check for discount points & origination fees plus any fees on the GFE that you don't understand. Try to have them waive the application fee also since it's usually not refindable if you decide to go to another broker/lender.
There should be no extra cost using a broker. They get paid by the lender.
Exactly. Just be careful which brokerage you use. ALWAYS ALWAYS ALWAYS go with big companies like Wells Fargo, Chase, Bank of America, etc. DO NOT go with these stupid "shady" mortgage brokers as they tend to tack on unnecessary points. I have been in the business for five years and the amount of "guido" type mortgage brokers that I have been approached by is ludicrous. I even have had to deal with them on several occassions and almost always they are going after the first time home buyer and almost always tack on additional points for NO REASON!
Are the costs mentioned in the GFE guaranteed? or can the lenders/brokers change it before closing? What are the additional POINTS that we are talking about here in case of brokers?
You should only pay points to lower your rate and also staying at the property for at least 5 years to benefit from it. The benefit of using a broker is that they deal with numerous lenders including the ones that DodgeViper mentioned and can find a lower rate for you.
With a reputable broker, your GFE should be close to your closing cost with the exception of tax & insurance escrows that may vary slightly. I would say within a few hundred dollars in most cases.
Don't forget to ask if there is a fee to "lock in" your rate; some charge for this also.
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