Choosing the Right Mortgage Broker, Mortgage, and Mortgage Insurance
Relationships come and go in our lives, some we keep and others leave our lives unnoticed. There are professional relationships that require long-lasting work. Relationships like accountants, bankers, and financial advisors require time and trust. Unless you plan on becoming a real estate investor, your mortgage broker is not a relationship that you might keep long after services are rendered.
It is important that you discuss concerns with any broker you speak with. If you get any feelings that a broker is hiding something, say “Thanks for your time,” and leave. If you think, even for a moment, that he’s not being forthright, he probably isn’t. If they tell you that they are not sure about anything, but they promise to find out, give them a brief chance.
Once you have found a mortgage broker that you trust, discuss mortgage options with him. Will a fixed-rate or adjustable-rate mortgage be best for you? What can you do to reduce fees and/or interest rate? If you trust your broker, he will lead you right.
Now let’s discuss mortgage insurance.
“What is it? Do I need it? How much will it cost me?”
Mortgage insurance is nothing more than insurance for your bank. It allows them to rest assured that if you default on your loan the bank will still get their money. “If people just buy mortgage insurance, why do I hear about all these foreclosures?” Good question with an easy answer. If you have paid down your mortgage and have 20% or more in equity, then your mortgage insurance is canceled. If you purchase a home for $100,000 and put 10% ($10,000) down, you will carry (within your monthly payment) mortgage insurance for approximately 4 years.
To close this entry, when choosing a mortgage broker, trust and openness is important on both sides. Go with your gut instinct, and if you are not sure…ask your wife. There is something to be said for a woman’s intuition….took me a while to learn that one.
Related posts:
- 3 Comments
- Tags: mortgage brokers, mortgage insurance, mortgage loans, Mortgages
Great info - however, I would respectfully disagree with you on the point you made regarding relationships and mortgage brokers. Unfortunately for most home owners who subscribed to a “one and done” theory of receiving mortgage advice in the past, they have been sadly left solo when the time comes to review their options or to seek reassurance as to the existing loan they are in and if it still meets their needs.
Investors are by no means the only segment of the home owner population who should be seeking out a long term Trusted Advisor relationship from their Mortgage Broker. A mortgage is typically the largest debt that an individual or family takes on - that said, it is of critical importance that they know exactly who they are working with and that they have a long term relationship based on integrity and trust in place for themselves. A mortgage should be checked each year, just like our physical health - because the cost can be thousands of dollars in unnecessary interest over the life of the loan and that is exactly what hampers people from saving more - let’s convert those dollars on the debt side (when applicable) and be sure people have them on their asset side. You wouldn’t go to a different dentist every time you have a tooth ache. You should think about that each and every time you make a decision to receive mortgage advice too.
ReplyHi Tracy, thanks for the response. I like your idea of a long-term Trusted Advisor, and checking in on the mortgage status at least annually to review and see how it’s working out for the home owner. And doing so with the same person would usually be beneficial to both parties, as the home owner may have changed circumstances that would be better suited with a different type of deal, and the broker would rather be the one to do that new deal than to lose it to someone else…
So it’s about trust. Can you trust someone to act in your interests when there’s a financial incentive for them? Financially, both sides should theoretically be better off with a long-term view…
Reply@brian: Hey Brian! I agree with you on that - and I’ll take it even one step further and would love to get your feedback - It is most definitely about trust, HOWEVER, in my personal experience, most of the home owners and prospective home owners we meet with are referred by their CPA, Financial Advisor, Realtor or famly, friend, etc…
Those who are not referred by someone who can “verify” the experience, etc are in a much more vulnerable position due to the sheer amount of MIS-information that is printed and reported on, surrounding the mortgage markets. They would love a long term relationshp, but, they are unaware of what exactly they should be looking for - THAT is huge…. What is the criteria… Ao, The more realistically we can get the message out there to consumers that it’s about receiving advice and NOT about being “sold” a mortgage loan, the more we can begin to rebuild the trust… Here is a short list that we have aggressively committed to getting out over the past few years, please feel free to strip my company info completely off this if you think it could serve as a good starting point for your readers…
http://tinyurl.com/MortgageCriteria
Take Care - Love the commitment to education you are delivering - Tracy
Reply