Refinance Mortgage Broker: How to Negotiate with Your Mortgage Broker for the Best Home Loan

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If you are refinancing your mortgage and are considering using a mortgage broker, it is important that you negotiate with your broker for the best loan. Mortgage negotiation intimidates most homeowners; however, when it comes to screening mortgage brokers, the process is very simple. Here are several questions you will need answered when shopping for a mortgage broker that will help you avoid overpaying for your home loan.Mortgage brokers are a typically a third party that places borrowers with a mortgage lender for a commission. There are several advantages to using a mortgage broker to find your next mortgage loan. Brokers can save you time and money if used with caution. Here are questions to ask your broker before entering into an agreement.o I’m shopping for a mortgage broker, one with access to a variety of wholesale lenders that close in the lender’s name. Is this how you work?This is important to determine if the broker is actually a broker and not a broker-bank. Broker-banks are exempt from RESPA legislation that protects homeowners from predatory lenders and will overcharge you for the mortgage every time. You only want to work with a mortgage broker that does not close in their own name.o Do the quotes come from the wholesale lender’s rate sheets or are you issued a company rate sheet?This is important because you want your interest rate lock to come from the wholesale lender and not the broker. If the broker locks from a company rate sheet you will get stuck with a higher interest rate because the brokerage company pads the interest rates in order to receive additional commission from the wholesale lender. Make sure the interest rate guarantee you receive comes from the wholesale lender, and not the mortgage company.o Tell your broker that you will pay 1 to 1.5 points for origination fees and processing fees and no more. Tell the broker you will not pay Yield Spread Premium (YSP). Tell the broker you will pay the necessary third party charges, but will not pay any broker markup.YSP is the markup the broker adds to your interest rate in order to receive a bonus from the wholesale lender. Mortgage brokers cleverly disguise this markup in their loan documents and Broker-Banks are not required to disclose this markup at all due to a loophole in RESPA legislation.o Ask your broker to see the original lock confirmation from the wholesale lender and the lock agreement from the broker’s mortgage company. Insist on seeing the HUD documents and the Good Faith Estimate prior to your closing date.If the broker agrees to these terms you have found a good mortgage broker for your home loan. You can learn more about your mortgage options including common mistakes to avoid by registering for a free mortgage guidebook.