Top 7 Questions To Ask Your Mortgage Broker

In today’s volatile real estate market consumers need to conduct their own due diligence when selecting a mortgage broker. Because mortgage guidelines change daily, lending standards are stricter than in recent memory and thousands of people are facing foreclosures, consumers need to make sure that their mortgage broker is no slouch. In order to confirm that a mortgage broker you’re considering working with is the right person for the job (structuring what will likely be the biggest loan you ever assume) you’ll need to do some research. Here are 7 questions you should ask to determine if your broker is the right person for the job.

1. What Kind Of Education/Licensing Do You Have?
   
   States vary on the type of education requirements individuals must complete in order to structure, package and sell mortgage loans. Some states require no licensing whatsoever, some require a license with the department of real estate and some individuals work under a company’s corporation license. Other states differentiate between mortgage brokers, mortgage originators, loan officers and licensed real estate sales persons. You can generally find licensing requirements under your state’s department of real estate, department of corporations, or department of banking. If you live in a state where there are virtually no license or education restrictions, look for mortgage professionals who have at least a bachelor’s degree from an accredited university
   
   
2. Are You Affiliated With Any Mortgage Associations?
   
   State, local and national mortgage associations generally require that member s agree to a standard of ethics in lending, including fiduciary duties to consumers. Membership in such an organization can be indicative of a mortgage broker’s oath to provide the best loan options available to consumers, regardless of the commission they will earn. Membership is some of the more exclusive associations moreover; require additional education, examinations and more. Furthermore, mortgage professionals who belong to national organizations may be listed in the association’s directory, where consumers are privy to complaints from consumers, should any exist.
   
   
3. What Is Your Area Of Specialty?
   
   Mortgage brokers may claim to have experience in all forms of mortgage lending. However, in truth a mortgage broker will generally tend to facilitate a specific kind of loan more than others. That said; if you ask your potential broker what their areas of specialty are, and they respond with “I’m full service,” get more specific. Ask what percentage of their total volume are for example, residential purchases. If they say they do all types of residential loans, ask them for specific numbers on home purchases, second home purchases, or investment properties. If you’re looking for a commercial loan, ask such questions as “how many commercial loans have you closed?” The key is to ask specifically about the type of loan you’re looking for, so as to determine their experience working with your specific needs.
   
   
4. Can You Provide Me with References?
   
   Most mortgage professionals will have at the ready, testimonials from satisfied clients. However, there is no way for you to determine how recent said testimonials may be. Instead ask for the names of a REALTOR® they have worked with. Do the same with asking for their title representative or escrow officer. It can’t hurt to ask for a consumer testimonial as well, but in some cases, they may not be able to provide this to you, due to privacy laws.
   
   
5. How Many Options Will You Provide?
   
   Professional mortgage brokers will be happy to structure multiple options for you, as they should. Ask for at least three options, and ask for the pros and cons of each loan. If you find your potential broker tells you that you only have one option, you should probably keep shopping for a broker.
   
   
6. Will You Disclose All Of Your Fees And Commissions Up Front?
   
   There has been a great deal of controversy surrounding “hidden fees” or earnings that brokers make on the “back end” of a loan, which has some consumer advocates up in arms. Don’t expect your mortgage broker to work for free for you, but they shouldn’t be earning a small fortune on your loan either. Ask for full disclosure of commissions and fees they will earn. If the number seems unreasonable to you, it probably is.
   
   
7. How Often Will We Be In Contact?
   
   This seems like an insignificant question, but it can mean the difference between a frustrating loan experience, and a satisfying transaction. Ask your broker how often they will be in contact with you, and how they will contact you. If you have an unusual schedule you’ll need to make sure your broker can accommodate your needs. Likewise, if you prefer to go over documents in person, you’ll need to find out if your broker can facilitate this request.

Ed Craine is CEO of San Francisco based Smith Craine Finance, an award winning mortgage brokerage. He was appointed Vice President of CAMB in 2007. Ed serves as an Executive Director for BNI, and is a contributing author to several NY Times Best Selling Books. Visit http://www.smithcraine.com