Is It All Right to Trust your Mortgage Consultant?
Is your loan broker looking after your best interest while recommending a mortgage for you? As reported by some studies loan brokers advocate those loans programs on which they earn the most commission.
In interviews, loan brokers themselves have said that the commission fees they receive are frequently the most important reason they advocate a particular lender to their customers.
You may not realise that loan brokers are salespersons who operate strictly on a commission basis. They can speak to various lenders about your loan. Whichever lender gets hold of your loan gives a commission to the loan broker.
In an ideal world, the loan broker would concentrate on what is best for the client, and not worry about the dollar value of the commissions that they will receive when the loan closes. But, in reality this is quite often far from what really happens.
It is human nature for commission-based sales representatives to concentrate on trying to close the deal that will produce the biggest reward to themselves when all's said and done, no matter what industry they are in.
Most customers arent aware that loan broker are paid only on a commission basis. This explains why customers have a tendency to believe that their loan brokers job is to suggest the best selection for their home loans, and to help them manage the confusing details of obtaining a mortgage.
Does this suggest that customers should leave loan brokers alone? Not necessarily. Financial brokers may well be able to assist customers find excellent deals on home loans. What it does mean is that customers ought not to blindly believe their loan brokers suggestions.
It is always a good idea to do your homework before talking to a loan broker or any other kind of lender. Do some basic rate shopping by yourself, so that you have some concept of the kinds of deals that are currently available in the marketplace. You will then be in a position to evaluate the loan offer proposed by your loan broker and decide whether it is better than or worse than the present market rate.
You should educate yourself enough about loans so that you are aware of what kinds of questions you should ask your broker. You will have to ask the right questions to be clear in your mind that your loan broker is giving you all the significant information about your loan. Legally, a loan broker need not tell you all there is to know about a loan. There is a huge amount of information that he could retain with himself. By law, he is required to divulge this information, only if you specially ask for it. It is much better to get all the answers beforehand, rather than being thrown a curve ball once you are locked in to a mortgage.