What should I look for in a mortgage broker? (nt) - Posted by Brian

Real Estate Investing
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Posted by Mabe on November 12, 2002 at 09:05:36:

Howdy Boston Joe,
Your post is really timely for me as I think I need to find a defferent broker and need some guidelines. Is the rate you mentioned “a 30 year fixed rate is now roughly at 6.0% with 0 points” for a commercial loan or under 5 unit? The 30 year rate I was offered this week was 75%/7.99/30 year for a 10 unit. Am only finding short term balloons through the banks, but wonder if I can do better. Any thoughts?
Mabe

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What should I look for in a mortgage broker? (nt) - Posted by Brian

Posted by Brian on November 11, 2002 at 12:35:10:

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Re: Did you ever see… - Posted by njdave

Posted by njdave on November 12, 2002 at 06:55:46:

the Steve Martin short film called, The Absent Minded Waiter? (he always gave change for $100 bill irrespective of what denomination you gave him…)

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Re: What should I look for in a mortgage broker? ( - Posted by BostonJoe

Posted by BostonJoe on November 11, 2002 at 14:46:36:

  1. Educating you on what particular loan program is best for you (fixed/variable/pay points/no points, no closing cost)

  2. Up-front and honest as to what costs you will occur on a deal, including estimates of not only closing costs but what pre-paid escrows and interest will be due at closing.

  3. Availability. If you come across a hot deal on a Friday afternoon and can’t get in touch with your mortgage broker until the following Wednesday, you might lose out.

  4. In theory, a mortgage broker should get you, the customer, the best possible deal. However, theoretically speaking, the more attractive deal they give to the customer, the less money they make on the deal. Example: a 30 year fixed rate is now roughly at 6.0% with 0 points. The mortgage broker gets a “kickback (yield spread premium)” from the lender for securing you a loan at 6.0% The mortgage company would approximately make 1% of the loan amount in this scenario. If the mortgage broker got you to take a 30 year fixed at 6.25% instead of the 6.0%, his “kickback/YSP” from the lender could be possibly 2% of the loan amount, double the initial commission.

I have nothing against people making money in a capitalistic society, I just think it is a bit hypocrtical to think that a broker is always looking out for their clients best interests. Luckily most states require full disclosure from mortgage brokers as to how much compensation they will receive on a deal. Remember, this is real estate and everything is open to negotiation, even the mortgage broker’s fee.