Mortgage brokers took a great hit to their reputations during the mortgage implosion that started in 2007. Callous loan officers who had only their financial gain in mind became poster boys (most of them were men) for the excesses of the home financing catastrophe. In retribution, mortgage brokers everywhere were looked upon in disgust and compared to these heartless agents who did not have the best interest of their clients in mind during the lending process.
The truth, of course, is that mortgage brokers took a lot of the blame that should reasonably have been shared between all players in the real estate industry as a whole, including unethical bankers, realtors, appraisers, title agents and some mortgage originators. Our country didn’t get into the real estate mess we are in today without many hands creating it.
Mortgage brokers have a very important role to play in the home financing marketplace by keeping lenders honest and by having them compete for the broker’s business, therefore giving smaller lenders access to the whole marketplace without having to invest in a sales force.
In short, the good mortgage brokers give consumers more choice and better prices than they could get on their own. Lenders have begun to realize this, and are selectively inviting reputable brokers to represent them again. With this positive development, it is time to take a fresh look at the value borrower’s gain by working with a broker.
A shopping service: Borrowers let the broker/agent do the work of sifting through all the possible loan options to find those that best fit the borrower’s particular needs.
Expertise: Good brokers keep themselves highly educated on marketplace developments. At a time when the U.S. Government is rolling out a myriad of incentives and special programs to either save homeowners from foreclosure or get them into a new home, it helps to have a pro guiding you through the research process.
A representative: Brokers represent you in dealing with the lender, and have counterparts at each lender that is dedicated to keeping their business. They can run interference between you and the lender by pushing your application through the approval process. In short, they handle the grunt work for you, doing what they do best so that you can focus on what you do best.
Consider these estimates without using a mortgage broker:
Hours researching – 10-20
Hours spent interviewing lenders – 10-20
Hours spent on paperwork – 10-20
Hours spent working with your chosen lender – Unknown! In today’s tough and confusing lending environment, expect to spend hours in conversation and follow-up
Extra interest paid because you didn’t find the best deal – Unknown! But, a 0.25% higher rate on a $200,000 loan equals $5,000 in extra interest paid in the first ten years
It’s a good bet that a seasoned mortgage broker will pay for him or herself at least two times over in time saved, interest saved, and headaches saved.