Finance Curriculum

Aside from comparing mortgages, comparing mortgage brokers is also a must as you would want to deal with a reputable one who would be able to assist you in finding the mortgage loan that would suit your financial needs. Here are some tips that should be able to help you out.

The first thing you need to do would be to search for several mortgage brokers near your area. You can either search online or ask your real estate agent or friends for any recommendations or references.

You should then call up the mortgage brokers whom you are most interested to work with and ask about the different lending institution they are working with. This would be good, especially if you prefer to get your mortgage from a particular lending institution.

As you compare your options for mortgage brokers, you should also ask how they are compensated. Mortgage brokers today can either work for a flat fee or for a percentage of the amount of the mortgage.

You should also conduct your own research on the background and experience of each mortgage broker you are considering instead of just relying on what the brokers would be telling you. This would help you in checking the reputation of the broker before hiring him or her.

Whenever a new loan is written, there may be origination fees or discount points assessed to the closing costs. In order to understand what they are and how they work, it is first important to understand what a point is. A point is simply 1% of the amount of the loan. So for example, if you borrowed $250,000 on a home loan 1 point would be $2,500. Origination fees usually range between one-half and two points on most loans. While origination fees may be used to pay down the amount of interest that will be tacked on to the loan they may also be in the form of commission for the broker who originated the loan.

Discount points on the other hand will always pay down the interest on the loan so that monthly payments will be less or in order to qualify for the loan under certain situations such as bad credit. Both origination fees and discount points are to be paid at the time of closing on the loan. In the case of mortgage loans, both would be listed on the lender charges portion of the HUD-1 Settlement Statement and that amount is payable at closing along with any other closing costs and down payments as stipulated in the contract.

The same also applies for loans used in debt consolidation circumstances.