Everything You Need to Know About Using a Mortgage Broker in LA
Buying a home in Los Angeles is exciting but also overwhelming and quite expensive. Having a good mortgage broker in your corner can substantially simplify the process and help you secure a proper lender when you decide to buy the home of your dreams or your future real estate investment.
Some deals that brokers secure might be similar to home loans you can obtain independently from a bank. However, the best brokers can find a better deal than you could ever get for yourself, securing access to special loan programs, shorter loan terms, adequate repayment plans, and more.
Here’s everything you need to know about using the best mortgage broker Los Angeles has to offer in order to choose the best one that would fit your requirements.
Ensure the Mortgage Broker Is Properly Licensed
Arguably the most important step before using a mortgage broker in LA is to ensure they are licensed to do business in California. It’s essential to use a licensed broker as they are covered by bonds or recovery accounts.
You can easily verify the broker’s license and find other related information about laws and regulations at the California Department of Real Estate.
Choose a Whole-of-Market Mortgage Broker
The whole-of-market mortgage brokers act as independent advisors and have access to the entire mortgage market. They have no links to any specific lender, which means they can offer a greater variety of mortgage options.
Generally, choosing a whole-of-market broker is a better alternative than using a mortgage broker tied to one lender or a group of lenders, as they are more limited in the type of mortgage they can recommend.
Consider the Broker’s Commissions and Fees
There isn’t a law that sets mortgage broker commissions and lender fees. This means that either you or the lender who funds the loan will pay the mortgage broker. Keep in mind that the broker might charge you loan application processing fees. Additionally, you might incur appraisal and credit inquiry expenses.
The broker must disclose all fees upfront and may only charge that amount in all cases. That being said, if the broker asks for payment in advance for any service other than appraisal or credit inquiry, make sure to contact the California Real Estate Department to check if they have the approval to do so.
Look For Reviews and Referrals
Reading reviews and past clients’ experiences can prove crucial to choosing the best mortgage broker in LA. Going through reviews will give you a better idea of the broker’s services, skill level, communication style, and approach to clients.
Another option is to ask for a recommendation from someone you know who recently bought a house in LA and used a broker. Finally, you can ask your real estate agent to get you a list of names of mortgage brokers in LA they have successfully worked with in the past.
Protect Yourself From Predatory Lending
When using a mortgage broker, it’s essential to be aware of the “predatory lending” practices. Predatory lenders might pressure you into signing agreements for various loans you can’t really afford or aren’t in your best interest.
To ensure you don’t fall prey to predatory lending, you should always choose a licensed and reputable mortgage broker who will have your best interests in mind. Additionally, you should inform yourself about the common practices used by predatory lenders and try to better understand the loan application, contract, and what you can or can’t afford.
Ask the Right Questions
Once you narrow down your selection, arrange a meeting with the broker so that you can get to know them better and ask them a few important questions.
For example, you should ask about the loan programs they offer and their opinion on which mortgage product would be best for you. Additionally, you should ask for information about their fees and what documents you might need throughout the process. Finally, make sure to ask anything you’re not sure about.
If the mortgage broker doesn’t seem confident when giving you the answers, you might want to continue looking for the most suitable mortgage broker in LA for you.
When looking for a mortgage broker in LA, you should narrow your selection down to at least two or three candidates and evaluate them in terms of services offered, experience, and how helpful they can be in simplifying the home buying process.
Finally, before committing to a broker, think long-term. Buying a home is one of the most expensive purchases in your life so take your time to make the most informed decision possible.