When it comes to obtaining a mortgage from a bank or a mortgage broker there isn’t much difference between brokers and banks when it comes to rates; brokers can usually get a better interest rate than most banks when refinancing a mortgage. Although it is possible for brokers to gouge customers with high costs, ethical mortgage brokers operate on a small percentage of the cost; they collect a commission from the lender of 1 to 2 percent of the loan, by fees for processing the mortgage application.
The mortgage refinancing industry has had some growing pains and horror stories to show for it.
There are bad eggs out there. The biggest problem is the bad eggs simply go from one broker to next. Despite tight regulations, there have had many complaints recently from home owners. The state of Ohio recently had 2,100 enforcement actions during the last three years and revoked licenses of 19 loan officers and 24 mortgage brokers. The state requires mortgage brokers to have three years experience in refinancing mortgages, pass a written exam, and undergo a criminal background check, be bonded, and pay a $350 licensing fee. Despite a few horror stories about their jobs, mortgage brokers say they serve a useful purpose and often can help homeowners find better interest rates when refinancing a mortgage.
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.
