If you are considering applying for your home loan with a broker, Mortgage Broker Good Faith Estimates are an excellent way to comparison shop for the best loan. Brokers are required to provide you the Mortgage Broker Good Faith Estimate within three days of receiving your application; however, most brokers will provide a copy if you ask for it. Requesting the Mortgage Broker Good Faith Estimate before submitting your application allows you to compare loan offers with more information provided by the Annual Percentage Rate.
When you receive the Mortgage Broker Good Faith estimate for loans you are considering, there are several items you need to check to avoid overpaying for your loan. First, check the origination or broker fee for your loan. This origination fee should not be higher than 1-1.5% of your mortgage amount for a home you will live in and 2-2.5% for any investment properties you own.
The next item you need to locate on your Mortgage Broker Good Faith Estimate is the loan processing fee. This fee is often paid to a third party company for processing; however, this fee should not be higher than $400. If your mortgage broker fee or processing fee is higher than these amounts you should question your mortgage broker as to why the fees are so high.
Finally, tell your mortgage broker that you will not pay retail markup of your mortgage interest rate. This markup by the mortgage broker is called Yield Spread Premium and will result in paying thousands of dollars in unnecessary mortgage interest. How can you tell if your Mortgage Broker Good Faith Estimate includes Yield Spread Premium? Ask your mortgage broker to see the rate lock from the wholesale lender and compare it to the interest rate found on your Mortgage Broker Good Faith Estimate along with the interest rate guarantee you received. If your mortgage interest rate is higher than the rate on the wholesale lender’s lock sheet, you know the mortgage broker has marked up your interest rate.
You can learn more strategies for comparing you Mortgage Broker Good Faith Estimate by registering for our free, six part mortgage tutorial.
My name is Rob Regehr and I’m a personal finance writer with a chip on my shoulder for banks and brokers that take advantage of my friends and neighbors.
