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Many people like to use a mortgage broker when they are in the market for a new mortgage. While they can be beneficial at times, there are a few disadvantages associated with using them. Here are some things to watch out for with mortgage brokers.
One of the big disadvantages that comes with using a mortgage broker is that you are going to have to pay for them. Even if you do not directly give them anything up front, they are going to get paid by you one way or another. Sometimes, lenders will provide them with a finder's fee. Other times, they will get a certain percentage of the value of the mortgage. Regardless of how the process works, the money is going to come out of the money that is borrowed. Most of the time, the bank is not going to provide a discount because you are working with a mortgage broker. This means that the cost of the mortgage broker's fee is going to be added to the total cost of the loan. While it might not seem like a very large amount of money to pay, every little bit counts. You already are going to be paying thousands of dollars in closing costs, and you will of course not want to pay any more if you do not have to.
Not Looking Out for You
Although most mortgage brokers are going to try to convince you that they are looking out for your best interests, sometimes they are not. Mortgage brokers work on commission. They are going to try to get you matched up with the appropriate lender. However, they may not necessarily always be looking for the best deal for you. Instead, they might be looking for the best deal for themselves. Some lenders will pay mortgage brokers more of a commission than others. A mortgage broker might be trying to steer you towards some loan programs that pay the highest commission to him. These mortgage programs may or may not be that best deal that he can find. Therefore, you need to try to determine if the mortgage broker you are working with is really looking out for you or if he is looking out for himself.
Working with a mortgage broker in today's market may not actually provide you with that much benefit. In the past, people used mortgage brokers as a way to access lending programs that they could not find on their own. With today's technology, you can simply use a search engine to find hundreds of lenders to work with. You will then be able to compare all of the different offers that are available from these lenders and try to find the best one for your unique situation. You may not necessarily need to pay a mortgage broker for something that you can do on your own.
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