Ed's Blog

Again, as a reminder, over the next few weeks, I’ll be posting questions for you to ask your broker before to help you decide if they are the best professional to help you with your home financing. Here’s the latest installment:

1. Do You Have A Degree in a Business Related Field?

Mortgage brokers are not required to hold a degree. Of course, in order to earn the title of “Broker” you do have to pass a pretty rigorous test here in California, and you’re then given a broker license number. While plenty of mortgage brokers do not hold a college degree, and are quite good at their jobs, it can’t hurt to work with a broker who has a substantial finance or business background.

Again though, as long as you are working with an actual broker, you can rest assured they’ve met the requirements mandated by the Department of Real Estate. Moreover, mortgage brokers belonging to associations like the California Association of Mortgage Brokers willingly agree to abide by a code of ethics, including fiduciary duty to protect the best interests of their clients at all times.

2. What kind of Success Ratio Do You Have?

When you settle on a loan with a broker, they will “lock in your rate.” This means that they’ll let the bank know that your application will be submitted, and therefore will lock in your interest rate (so that it doesn’t increase.) An experienced, ethical mortgage broker will only lock in your loan if he is certain that you will be approved for that loan; meaning that he’s seen your application, he knows what the bank will require and has determined that you will be approved. This type of broker will have a high lock to loan-closed ratio.

Unfortunately, less experienced or unsavory loan agents will lock in borrowers without doing their diligence in confirming that you will be approved. Thus their lock to loan-closed ratio will be low. Look for a broker who has a lock to loan-closed ratio of at least 90%.

3. Can You Offer Loans From Multiple Lenders?

Independent mortgage brokers have the advantage of shopping for the perfect loan for you from dozens (if not hundreds) of lenders. Unlike working with a loan agent who works at a bank (and can therefore only offer loans products from their employer) a mortgage broker is able to provide you with options from multiple lenders, so that you can select the loan that is best for you.

That’s all for today. More tips to come in just a few days. In the meantime if you have any other questions, feel free to leave a comment, or call 415-406-2330.