Online brokers negotiate financing deals with several lenders.
This may mean that you can find a better deal through their site
than by working with the lender. Not all mortgage brokers
guarantee the lowest refinancing rates, so you should also
compare brokers.
Understanding Mortgage Brokers
Mortgage brokers specialize in finding financing. They work with
many lenders to offer you several financing choices. They
partner with traditional banks as well as thrift institutions,
credit unions, and mortgage companies. They can even connect you
with subprime lenders if you have poor credit.
Not all brokers call themselves "mortgage brokers." But any site
that offers bids from more than one lending company is a broker.
Make sure you know if you are dealing with a broker, since this
will affect your closing costs.
Brokers collect a fee for each loan they refer to a lender.
Sometimes you will pay this fee as part of the closing costs,
other times it will come out of the mortgage company's fees.
Even with the additional expense of a fee, brokers can usually
find you better deals than if you shop alone.
Working With Broker Sites
Online broker sites enable you to make quick comparisons from
basic financial information that you provide. Usually, you will
need a general idea of your credit score, loan amount, and down
payment. The quote you receive gives you a rough idea of rates
and closing costs.
Take the time to check with a couple of broker sites to find the
best deal. Each broker works with different lenders and
negotiates unique deals. Spending a few extra minutes analyzing
quotes can save you thousands in interest costs.
Taking The Next Step
Once you have narrowed your choices down for refinancing,
request a detailed quote from the lender. This will require the
financing company to look at your credit score. You don't want
to request too many detailed quotes, since your credit score is
temporarily lowered every time a lender makes a credit inquiry.
The detailed quotes will list rate along with terms, such as
required points. Even with this accurate quote, it can change
hourly based on market indexes and bank rates. If you find a
good deal, it is best to act on it quickly to lock in rates.
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