Buying a home, securing a first home loan, or refinancing your current loan can be daunting, especially because you have to be on your guard at all times or someone will take advantage of you. There are a lot of predators out there who solely look to prey on the unsuspecting and the inexperienced, so arm yourself appropriately. For example, when dealing with brokers, you would be wise to choose an Upfront Broker (UMB) because all of their fees are disclosed at the very beginning in a commitment that establishes services and charges up front.
If your broker is not a UMB, then he or she can be converted to one for the duration of your transaction. Draw up a letter specifying the parameters of your partnership and then have the UMB sign and date it. Most UMB's will be fine dealing with you in such a manner, and if they are not, that tells you more than enough in and of itself.
Your letter should include:
- A statement that the broker will be the customer's agent, and work on their behalf to try and obtain the best possible mortgage plan and interest rate to fit the customer' s needs.
- Fees delineated up front, including how the UMB's fee will be paid (percent of loan, hourly charge, fixed dollar amount, etc.) The price should include loan processing and should cover all of the UMB's fees.
- Known payments to third parties, with any credit due given directly to the customer.
- A confirmation that the UMB will lock the rate when specified by the customer and will provide them with a copy of the commitment letter from the lender.
- A statement concerning the disclosure of the lender's wholesale prices to the borrower.