Mortgage brokers are middlemen who prepare a loan application and submit it to an end lender for you. They are paid about 1.5% of the loan amount from the end lender. Lately I have come to the conclusion that the most (not all) mortgage brokers actually hinder a client trying to close on his or her home.
It is best to obtain a mortgage from a local representative (not a 1-800 line that is out of state) of a direct lender (with no middle man). This way you deal with a person who cares about your closing, wants it closed on time and smoothly and will make sure that the money is there at closing. Examples of direct lenders would be Harris Bank, Fifth Third, Wells Fargo, Countrywide and Charter One (Washington Mutual is usually a hassle, but is getting a little better.)
Reasons not to use a mortgage broker:
1. The broker takes the application and may not pass all of the information on to the end lender, forcing you to resupply the information at closing. With mortgage brokers we frequently cannot disburse the loan because the broker did not give the end lender some documentation and we have to hunt down the broker at closing (of course he or she is not there) and find the missing documents.
2. Often it takes at least 72 hours from the time the closing is scheduled to prepare the documents and close. That’s too long 24 to 48 hours is plenty of time.
3. Mortgage brokers charge document preparation, underwriting fees, review fees and other garbage can charges. The end lender also charges these same fees. Why pay two sets of fees?
4. The funds for the mortgage rarely come from the mortgage broker, but are usually wired from the end lender to closing. The end lender does not know you and really does not care about you or your closing. The end lender only cares about having their loan file correctly documented and disbursed. Many of them do not even BEGIN to send the funds for the mortgage until the closing is over. They start to wire the money after a signed RESPA or HUD-1 is faxed to them. This means your moving van will remain parked in front of the new house (with you paying the movers) until the wire comes in. This is absolutely wrong and no client should have to put up with it. The money should be at closing in the form of a check or should be wired the day before closing.
If you must use a mortgage broker, but be sure that they fund their own loans by check at closing, that there are not duplicate charges and that the loan representative will be at closing.