Mortgage brokers generally have access to more lenders than buyers working on their own, according to the Federal Reserve Board’s online consumer guide “Looking for the Best Mortgage†. As a result, brokers may offer a wider range of loan options. Also, says Yvonne Hemmingsen, mortgage broker with Diversified Capital Funding in Pleasanton, California: “Mortgage brokers are typically more flexible and available to you and your real estate agent. Brokers are often more readily available [than bank loan representatives] to provide preapprovals and payment quotes while you’re house hunting on a Sunday afternoon.â€
Be warned: Although good, ethical brokers will try to find the most advantageous deal for you, they have no obligation to do so, according to the Federal Reserve’s guide. Also, “a mortgage broker shops around within the network they deal with,†says Greg McBride, senior financial analyst at Bankrate.com. “But is that really the best deal you can score? The best deal may be something you find yourself. Cast a wide net, including your current financial institution and local credit unions.†Bankrate has a search engine that helps buyers see what rates are available in their area.
The Simmonses decided to go it alone. They were emboldened by the fact that a trusted relative was in the real estate business and that Aneika had bought a townhome before they were married. “We shopped around and decided that we would go to the lender that would give us the best deal,†says Anjuan. Their strategy was to get one approval and then use that documentation of their strong qualifications to seek other offers. “We wanted our bank’s pre-approval in hand to negotiate,†he continues. “Once we had that, we went through the process of getting quotes from a variety of other lenders.â€
Step 4: Apply for loans and compare offers. When you submit a loan application to an individual bank or mortgage broker, they must offer you a written Good Faith Estimate (GFE) no later than three days after you apply. To facilitate comparison shopping, the federal Department of Housing and Urban Development (HUD) regulates which fees must be disclosed by a lender on a GFE and publishes the form that every lender must use to make these loan quotes or disclosures. Anjuan says, “In our mind, a loan quote wasn’t an offer until it was written down.†Anjuan and Aneika collected GFEs from five lenders before making a final decision.
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