Choosing your home mortgage is a negotiation. The mortgage broker is trying to negotiate the best deal for his client that will still be profitable for him. Meanwhile, the consumer is negotiating the lowest possible rates and costs that he or she can get the mortgage broker to agree with. It’s very similar to the tug-of-war involved with buying a car from a local dealer.
It has been said that “knowledge is power” and this is most true when it comes to negotiation. When buying a car, the best negotiators do plenty of homework to find out how much it costs for the dealership to purchase this car. If you do this, you have the power to negotiate all the way down to this price. You’ll be in a privileged position of knowing when it pays the dealer to sell and when it doesn’t.
In a similar way, you have the most complete information spelled out in front of you on the Good Faith Estimate. This shows how all parties of your mortgage team will be paid through the closing costs of your mortgage. This is every bit of knowledge that you could use; all on one piece of paper! It’s like cheating!
There are many mortgage brokers that are interested in only creating a quick buck and taking advantage of their clients, rather than actually servicing and educating them. Scouring over the Good Faith Estimate gives you the ultimate power. The knowledge of how your costs are calculated. It is impossible for someone to pull the wool over your eyes when you are staring at every last detail of your loan.
The Good Faith Estimate can also be a weapon for the honest mortgage brokers. Mortgage shoppers come to me all the time that say they have found a great deal online or in a local paper. They say that the offer seems too good to be true. By sitting down and examining the “GFE” we can often determine whether it is or isn’t "too good to be true" and we uncover surprises and obstacles the other broker would be sure to run into. This gives the “good brokers” power to overcome a “too good to be true” offer.
My suggestion to homebuyers is to be very careful of the outrageous offers and make sure you get a detailed explanation of your loan first. Then, make sure your broker supplies you with a Good Faith Estimate. Visit him again and have him explain each and every line item to you. Some of the figures on the GFE are estimates while others are solid. Find out which are which. This will ensure that your broker stays true to his fees.
Kevin Blasi manages Mortgages Explained! at: http://explaintome.blogspot.com
This is a free resource to educate consumers about the mortgage process and explain exactly what mortgage brokers do.
Kevin has been in the mortgage loan industry for 5 years. Currently, he specializes in securing mortgage loans for first-time home buyers in Northeast Pennsylvania.
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