Shopping for a Broker for a Mortgage Refinance

When shopping for a second-mortgage, the options offered by lenders are so abundant and competitive, it's sometimes more efficient and easy to use a professional mortgage broker. When shopping for a real estate broker, most homeowners are familiar with what to look for, because of past experiences. But many consumers have never needed a mortgage refinance broker before, and are not sure what criteria to use when choosing one.

Here are three questions to ask a potential mortgage broker to help you make a wise choice:

Question 1: How long have you been in business?

Many mortgage brokers work the same way that independent insurance agents do, by brokering deals between customers and lenders. Experience in the business is a plus, because it means they have an established network of lenders and a good working knowledge of how the mortgage game is played.

Question 2: How do you get paid?

Review the charges that you're expected to pay, to ensure that they seem reasonable. After all, a hard-working broker who gets you a great refinance mortgage or home equity loan deserves adequate compensation.

But there are other fees that are sometimes listed on a closing statement, such as "POC" or "Paid Outside of Closing." These can include bonuses paid by lenders to the broker for selling mortgage refinance packages that carry a higher rate. That could influence your broker to sell you something that you don't want or need.

Question 3: Will you provide a commitment letter to lock in your rate?

Ask your broker immediately for a loan commitment letter from the lender when you lock in your rate. This helps to ensure that the broker doesn't "sit on" the decision to lock, risking that you'll lose your rate if interest levels jump overnight.

Ask your friends, your realtor, or a family member to recommend a mortgage broker with whom they've had a great experience. Shopping for a second mortgage or home equity loan can be overwhelming, but the services of a skilled and reputable mortgage broker can usually smooth the way. It pays to shop around.