Many home loan borrowers today, get their loans through mortgage brokerages.
By: Phoenix Lee
The main advantage of using mortgage brokerages, instead of going through a bank, is that the broker can shop among various lenders to find the best home deal.
As many mortgage brokerages are small businesses, borrowers often wonder if they can trust them.
It is not wrong to have such a concern, as a home loan could be the biggest loan you would take in your lifetime. If you have such a doubt, here are four questions to ask mortgage brokerages whom you are thinking of dealing with:
- Can I get references?
- How long have you been in business?
- How are you compensated?
- How do you handle rate locks?
Can I get references?
Ideally, you found the broker through a reference from a friend, relative or co-worker. But if you selected a broker through another criterion — maybe you walk past the broker’s office every day, or you responded to a Facebook advertisement — you can request references.
Ask for the names and contact information for the most recent two or three customers who closed their loans. Then follow up by calling them. Ask if they were treated fairly and if the broker’s good faith estimate of closing costs was accurate. Above all, ask if they would do business with the broker again. You might find yourself talking to a borrower who already is a repeat customer — someone who got the original mortgage through the broker, then refinanced through the same broker. That’s a good sing.
How long have you been in business?
Mortgage brokerages which have been in business for several years, inspire confidence.
How long is long enough? Even a newbie to the mortgage business can give good service, but if you’re looking for someone who had a career in the mortgage industry in slow times as well as in frenzied times — choose a broker who has been doing home loans for at least five years. Preferably more.
Thousands of mortgage brokers have jumped into the business since the refinancing boom began, and many of them won’t be around when the boom ends. Your broker is more likely to stick around if he or she was brokering home loans back in the relatively lethargic days of 2012 and 2013.
How are you compensated?
Most mortgage brokerages offer free services to best home loan seekers.
You heard right – the services of the mortgage brokers are usually free. That is, unless you have a complex situation or if you are only borrowing a small amount.
In case you are wondering why it is free to the borrower, it is because the lenders will pay the mortgage broker a distribution fee upon successful disbursement of loan.
icompareloan also has tools such as the home loan comparison system, which compiles all the available loans that meet your search query, when you input the loan quantum, duration, housing type and whether the property is completed or under construction.
You can download the sample property buyer home loan report here.
How do you handle rate locks?
Some brokers gamble with rate locks. You tell the broker to lock a certain rate on a certain date, and the broker tells you over the phone that your rate is locked. Secretly, the broker doesn’t lock the rate, hoping that rates will drop before your closing day.
If rates drop — even if they dip for just a day — the broker can lock at that lower rate. You pay the higher rate that you locked at. The broker can make a little profit on the difference.
If rates don’t drop, and instead they rise, the broker might tell you that there was a glitch in your paperwork, or that the loan process was otherwise delayed, and that it’s impossible to close your loan before your rate lock expires. Or the broker might tell you that you are mistaken, and that you never really did lock your rate.
The safest way to go is to ask your broker for a loan commitment letter from the lender. It should have the lender’s name and specify the interest rate, the date the rate was locked, and when the lock expires.
The best home loans often come with different features which fit your unique financial needs. And from home loan with a redraw facility to interest-offset mortgage accounts, there are many different types of home loans with varying features which can help you better manage your mortgage over the long term. A good mortgage broker would be able to analyse your unique situation and recommend which home loan features are best for you.
How to Secure a Home Loan Quickly
Are you planning to invest in properties during this period of private home price decline but ensure of funds availability for purchase? Don’t worry because iCompareLoan mortgage broker can set you up on a path that can get you a home loan in a quick and seamless manner.
Our brokers have close links with the best lenders in town and can help you compare Singapore home loans and settle for a package that best suits your home purchase needs. Find out money saving tips here.
Whether you are looking for a new home loan or to refinance, the Mortgage broker can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us.
For advice on a new home loan.
For refinancing advice.