Shopping for a Mortgage

[Brian Anderson]

I have been pre-approved by a mortgage broker who was recommended by an investor friend. How do i go about shopping for mortgages and better rates without it affecting my credit score?

[Marty Johnston]

@Brian Anderson - Are you looking to shop between brokers? A brokers job is to shop your deal and loan for you. This is their purpose, so that they can assure you that you're getting the best rates and terms for your particular deal among their pool of lenders that they operate with. You want to find a broker that operates with many so that they have a large pool with great direct lenders. If you're wondering about the average broker fees - brokers operate by a point system, and that's it. Brokers do not get paid until closing. I would recommend staying away from any that do charge up front fees, as they may not actually perform and you're out some money for no good reason. The only fee you should ever incur up front is an appraisal for the subject property of the deal.

Brokers are not direct lenders, so they do not have their own rates and terms. They are simply acting as your "agent" and correspondent with a large pool of lenders to shop your deal for best rates and terms available. They also will work with you all the way to close, making sure that all necessary documents are submitted correctly and timely, while also working with your title company. They can really make your financing side of things go very smoothly and give you a piece of mind that you're getting the best available.

Brokers don't offer this service for free, they get a % of the loan amount - typically 1-2 pts for perm financing and anywhere from 2-3 [sometimes 4 for time-pressured deals or very low-priced LTV's] for HML, Bridge, or Ground up Construction.

Hope this helps!

Marty