Going for the lowest rate online
This is by far the most common mistake people make when choosing which mortgage broker to work with. They see a low interest rate advertised online and make their decision based solely on price.
Of course, the interest rate is an important piece of the mortgage refinancing puzzle, but it should be the first step in evaluating a broker, not the only step.
The first reason advertised interest rates shouldn’t be your only criteria is that they only apply for borrowers with top flight credit. For most people, that’s not going to be the case. The advertised rate is more like a teaser rate, the real rate the broker will be able to offer you is likely to be very different.
There are many different lenders on the market and depending on what kind of financing you are looking for the rates can vary anywhere from the low single digits up to 10% or higher.
The other reason the interest rate shouldn’t be the only factor you consider when shopping for a broker is that who you work with is much more important. Most brokers will be able to secure you the best interest rates for your unique situation because brokers have access to most of the lenders on the market.
A good interest rate is not a unique advantage of one broker over another. The quality of service most certainly is though. Not all brokerages are equal in this regard.
Read More: 5 Tips for Refinancing Your Mortgage
Getting a mortgage or refinancing one is a major decision in life and you need to have someone in your corner that is going to fight to get you the best deal possible. Customer service should be a top priority for the broker you choose to work with.
They should not only be able to negotiate on your behalf, they should also keep you informed of the situation and make sure you are comfortable with the chosen solution. They should be responsive if you have questions and help you to understand what they are working on, and why the details of your mortgage make sense for you.
The secret that some mortgage brokers don’t want you to know is that they have to serve not only their clients, but also the lenders and underwriters they work with.
Chances are, if a broker doesn’t communicate with their clients well and generally offers poor service, they probably don’t have great relationships with the lenders either. And that means they may not be able to offer you the best rates or products.
This is why it pays to work with a broker that puts customer service as their number one priority.
Working with friends or family
It seems like everybody knows someone who works in the mortgage industry. You have probably got an uncle or cousin that says they can get you a great deal on your mortgage refinance but working with friends or family can be tricky.
It’s not necessarily a bad idea on its own. Maybe they really can get you a great deal, but what will it cost you in terms of your relationship with that person if things don’t go as planned?
Mixing business with your personal relationships can be dangerous, and the mortgage industry is far from certain. There are a number of things that can happen over the course of putting together a deal that can complicate matters.
And what happens when the person you are working with doesn’t take your situation as seriously as you think they should? That can make those family dinner’s a little awkward!
Working with a broker that won’t keep you in the loop
We alluded to this a few times already, but this is all too common in the mortgage industry. The broker you choose to work with should be keeping you informed on the progress of your deal and not ignoring you for days on end.
Even if there is no progress to speak of, your broker should be reaching out to you. This is where references really matter. Speaking to the people you trust and asking them which broker or agent they worked with is a great way to get a feel for someone before you work with.
Ask them how their experience went with their broker and what kind of communication they received, this will give you the best picture as to how they will likely work with you.