Avoiding Broker Fees
As the economy is sinking, many mortgage brokers are sinking right along with it. Competition is fierce and most brokers are eager to do what they can to get and keep your business. Using your buying power to negotiate a better broker’s fee can and will save you thousands of dollars in the long run.
Typically, the cost of a mortgage broker is rolled into your homeowner’s loan, under the category of “closing costs”. These closing costs can be paid up front, but most new buyers opt to put them into their loan. This short term financial gain can cost a lot in the long run, so while shopping for a mortgage broker, be sure to budget and opt to pay this fee up front.
Paying up front will not only motivate you to get the best rate possible, but it will also save you money on your principle. If you roll your broker fees into your loan, you are paying long term interest on something you could have paid for out of pocket. With a thirty year fixed mortgage, that fee can really add up, so make it a practice to budget before buying.
When deciding which mortgage broker to work with, fees should play a significant part in your decision. There are companies that have much higher fees than others and often, those fees are for doing the same type and quality of work. When hunting for a mortgage lender or broker, look for the one with top experience but the lowest fee.
If you like a particular mortgage lender or broker but don’t like their closing costs, there are areas where you can negotiate. Sometimes, broker’s fees can add up to 1-2% of the price of your home. However, if you go through their expenses line by line, it is not uncommon for you to spot areas where you can talk them down in their prices.
Mortgage brokers are willing to negotiate for the same reason any other business is – more often than not, they would rather get your business at a reduced rate than not get your business at all. These are some areas where you might be able to lower your price.
Appraisal fee - brokers usually work with the same appraisers, so volume is a great argument against a set fee. This is an area that will be tough to negotiate but it’s always worth a try.
Credit Report fee – typically, the lender will pay for this. Don’t let the broker charge you for this unless they can prove they had to pay for it.
Processing fee – this covers all the work that gets your loan together. Negotiate on this but gently, as this actually is the majority of the legwork you’re paying for.
Underwriting fee – don’t pay for this. An underwriting fee should only be charged by a lender. If your broker tries to hit you with this, have this fee removed or walk.
Remember, it’s the broker’s job to get you the best loan - it’s your job to shop for the best broker.
Typically, the cost of a mortgage broker is rolled into your homeowner’s loan, under the category of “closing costs”. These closing costs can be paid up front, but most new buyers opt to put them into their loan. This short term financial gain can cost a lot in the long run, so while shopping for a mortgage broker, be sure to budget and opt to pay this fee up front.
Paying up front will not only motivate you to get the best rate possible, but it will also save you money on your principle. If you roll your broker fees into your loan, you are paying long term interest on something you could have paid for out of pocket. With a thirty year fixed mortgage, that fee can really add up, so make it a practice to budget before buying.
When deciding which mortgage broker to work with, fees should play a significant part in your decision. There are companies that have much higher fees than others and often, those fees are for doing the same type and quality of work. When hunting for a mortgage lender or broker, look for the one with top experience but the lowest fee.
If you like a particular mortgage lender or broker but don’t like their closing costs, there are areas where you can negotiate. Sometimes, broker’s fees can add up to 1-2% of the price of your home. However, if you go through their expenses line by line, it is not uncommon for you to spot areas where you can talk them down in their prices.
Mortgage brokers are willing to negotiate for the same reason any other business is – more often than not, they would rather get your business at a reduced rate than not get your business at all. These are some areas where you might be able to lower your price.
Appraisal fee - brokers usually work with the same appraisers, so volume is a great argument against a set fee. This is an area that will be tough to negotiate but it’s always worth a try.
Credit Report fee – typically, the lender will pay for this. Don’t let the broker charge you for this unless they can prove they had to pay for it.
Processing fee – this covers all the work that gets your loan together. Negotiate on this but gently, as this actually is the majority of the legwork you’re paying for.
Underwriting fee – don’t pay for this. An underwriting fee should only be charged by a lender. If your broker tries to hit you with this, have this fee removed or walk.
Remember, it’s the broker’s job to get you the best loan - it’s your job to shop for the best broker.