One of the most difficult events in a person’s life is buying a home. There are many factors that can influence the style and amenities of a property. Schools, as well as other important aspects, will also affect its location.

Mortgage application is one of the most complicated aspects of home-buying. Mortgage brokers are here to help.

What is a mortgage broker?

A Beverly Hills mortgage broker

  • This is the intermediary between the borrower/lender and handles the tedious process of securing the loan as well as gathering all the paperwork.
  • All paperwork required for refinance or purchase of a property, including bank statements, credit reports and employment history.
  • Can anticipate potential problems during the application process.
  • It is possible to determine what issues could cause problems with one lender and another.

Why some buyers don’t want to deal with mortgage brokers

Homebuyers may feel more at ease going to a large bank to get their loan. Buyers should speak to a broker to learn all the options for the type and rate of the loan.

Beverly Hills mortgage brokers can also work with underwriters, title companies and agents until the keys are handed over.

Buyers may avoid brokers in some cases because they feel they can handle the costs of broker services. The lender generally pays 1-2% commission to the broker when closing, but this is not always the case.

The broker will charge a small fee to borrower, commonly called a loan origination fees. This fee can be added to the loan amount, or it can be paid separately. Sometimes, however, it is waived to encourage borrowers to use the broker’s services.

When hiring a professional, such as a Beverly Hills mortgage broker, it is important to be careful. Some brokers will close as many loans possible to make a buck, compromising the integrity of each transaction and their service.

A mortgage broker won’t have the same control over your loan as big banks that underwrite it in-house.

How can borrowers take advantage of the mortgage broker’s benefits while still protecting their own interests?

Borrowers should:

  • Ask for referrals from family and friends. If possible, check out brokers’ references.
  • Verify that the broker has passed both their state’s exam and the national exam.
  • Brokers can be asked which lenders they work with. Brokers can simply state that they deal with AAA-rated lenders, credit unions in the area, and secondary market lenders like FNMA or GNMA. This will indicate to the borrower if they are a good match.
  • Ask the broker if they have professional liability insurance.

Professional liability insurance is vital

A handful of successful Beverly Hills mortgage brokers have professional liability insurance that protects them against negligence during the origination and closing of loans.

The broker could face allegations of mishandling documents or discriminating against potential borrowers.

Beverly Hills mortgage brokers could also be sued if they make mistakes during closing. Professional liability insurance could provide coverage for defense costs, even though the broker is not responsible.

Although the housing crisis damaged the reputation of Beverly Hills’ mortgage brokerage industry, increased regulation and scrutiny have allowed it to make a comeback.