By far, the vast majority of mortgage brokers are good, honest people. But, like every profession, there are some bad apples in the bunch. And, if you don’t know what you’re doing, you may get ripped off by a mortgage broker.
If you use a broker to help you get a mortgage, there are some things you should be on the look out for to protect yourself and your money.
Below you’ll find some helpful information to help you understand how mortgage brokers rip you off if you unfortunately find yourself working with one of those bad apples.
You’ll also find some helpful information about what mortgage brokers do. And why (so long as you find a good one!) you may want to have one help you find a mortgage.
How Mortgage Brokers Rip You Off
- Brokers Charge The Lenders To Pay The Broker’s Fees
Many mortgage brokers who charge a flat fee may have the mortgage lender pay for their fees. And in cases like these, brokers will choose a more expensive house loan offer so that they will earn more.
If your mortgage lender pays the broker’s fee, chances are, the broker’s fees will be higher. And if that is the case, ultimately it’s you who will end up paying more.
- They May Give You Bad Loans
For mortgage brokers to earn more from you and your lender, one of the things that they will do is to offer you a more expensive home loan. This can create a bad incentive for the bad apples to find you a bad loan with terms and fees that help them, but not you.
- They May Provide Incomplete Information
In some cases, mortgage brokers may not disclose certain things to you about the mortgage loan offers that they show you.
These are only a few of the many ways a mortgage broker may rip you off. Now, it is important to learn how to avoid getting ripped off by your mortgage broker.
How to Avoid Getting Ripped Off
One of the ways we would suggest is to ask for the all details of the home loan that you chose. This includes the loan size, the interest rate, and the estimate of certain costs like taxes, insurance, and down payment. Also ask to see information about multiple loan options so you can compare them for yourself.
Also shop around on your own and get some mortgage quotes directly from some lenders yourself. Then you can compare them with what the mortgage broker finds for you and see which options are the best for you. You may even be able to use other quotes you get to negotiate some of the fees a broker charges.
What Do Mortgage Brokers Do?
Now let’s discuss what mortgage brokers do. Mortgage brokers are not the ones who make the mortgages. Rather, they are simply responsible for researching various mortgage options for you, and presenting you with the results. They are responsible for finding the best house loans for your needs and budget.
In order for them to do that, you have to provide them with certain documents. These documents may include your:
- Credit reports and scores
- Most recent tax return
- Recent pay stubs
- Employer’s contact details
Upon providing them the documents mentioned above, your mortgage broker will be the one who will look for the mortgage deals for you. This can be beneficial for many people. Especially if the buyer does not have enough time to get a bunch of mortgage estimates on their own.
Overall, working with a good mortgage broker can save you a lot of time and money. And they can be an invaluable resource that will help you navigate the home loan process.