Refinancing or purchasing a home can be a stressful process. For most people it will involve the largest financial transaction of their lives. It’s important during a time like this for people to be comfortable with the people they choose to help them through the process.
Arizona Mortgage Brokers and Mortgage BankersArizona licenses mortgage brokers and mortgage bankers, but the loan originators that work for those companies are currently not licensed. This situation may change in the future, but for now, it calls for a “buyer beware” attitude in home refinancing or purchasing. If you have any doubts about the authenticity of your loan officer/originator you should ask to see his/her current broker’s license.
Mortgage Brokers vs. Mortgage BankersA mortgage broker is a self-employed professional that specializes in real estate financing. Mortgage brokers can offer a wide variety of products because they have access to dozens of lending institutions. According to The National Association of Mortgage Brokers, two-thirds of Americans have used mortgage brokers. Mortgage bankers can offer their products directly to the consumer, avoiding the middleman. A mortgage banker can give a consumer direct loan approval. Mortgage brokers may have slightly higher origination fees, but may be able to find slightly better interest rates. Understanding this basic difference between mortgage brokers and mortgage bankers can help you decide which will better meet your individual needs. The industry is mature, and is well represented in Phoenix, so finding a local company to handle your loan should not be difficult.
Tips for Selecting a Mortgage Broker or BankerWhen choosing either a mortgage banker or broker you should consider the following tips:
- Decide on whether getting the “best available rate” is more important, or if you want to deal with the institution that will actually lend you the money. A mortgage banker can give you direct approval, and sometimes that can cut a week or so out of the process.
- Whether you choose a banker or broker SHOP AROUND. Make sure that you feel comfortable with whom you are going to do business. Can this person answer all your questions satisfactorily? Does he/she act in an ethical and professional manner?
- Beware of high-pressure sales tactics. You should never accept a loan that you do not understand. You should walk away from anyone who pressures you or makes you uncomfortable. You are not obligated to proceed at any time in the process. You are only obligated when you sign the documents at the title company. Even then, in Arizona, you have a 3 day right of rescission when refinancing. Purchase loans do not carry that same 3-day right, so be very sure you are satisfied and understand the product completely.
- Ask friends, family and co-workers for references. They are a valuable resource, and usually can provide the name of someone they have used and found to be trustworthy. Ask them if their broker/banker communicated with them throughout the loan process. Referrals are probably your best way to find a good broker/banker.
- Beware of claims that seem “too good to be true," and run from upfront fees. For example when you hear “no closing costs” little red flags should go up. Compare closing costs and interest rates line by line on your Good Faith Estimate. Also beware of upfront "fees." A reputable firm will not charge “rate lock fees” or “application fees.” Most reputable brokers and bankers will not charge upfront fees at all. The only fee you should expect during the loan process will be the charge assessed by your licensed real estate appraiser.
Researching MortgagesYou've got to start somewhere. Here are some valuable web sites to help you navigate the mortgage loan jungle.
The Mortgage Bankers Association can assist with current market rates, and provides a quarterly forecast of key economic and mortgage market indicators.
The National Association of Mortgage Brokers provides information about selecting a certified mortgage broker.
The Arizona Association of Mortgage Brokers has a list of all mortgage brokers who are a member of that organization.