Sign up now and hold your rate for 90 days
Contact Us

Mortgage Broker Fees & Hidden Costs

it-s-all-yours-now-2022-08-02-13-26-56-utc

When purchasing a home, refinancing or looking to sell your current property, it’s essential to be aware of all fees and hidden costs associated with getting a loan. These can add up to tens of thousands of dollars and make managing finances difficult.

Mortgage Broker Fees & Hidden Costs
Every year, mortgage brokers assist countless borrowers in securing the ideal loan for their needs. While working with a broker has its advantages, you should be aware of all fees associated with using this service.

Common Broker Fees
Mortgage brokers receive compensation in two primary ways: borrower-paid or lender-paid. The amount of this compensation varies based on the loan size and whether it’s paid upfront or at closing.

Borrower-Paid Broker Fees
Most mortgage brokers charge a borrowers-paid fee at the time of loan application or closing. This fee can range anywhere from 1% to 2% of the total loan originated, though some allow borrowers to roll this cost into their mortgage payment.

Some lenders charge a broker commission or other fees for originating the loan, so it’s essential for borrowers to compare these charges with other offers in order to avoid overpaying on their loans.

Lender-Paid Broker Fees
Prior to 2011, mortgage brokers could receive compensation from both borrowers and lenders on loans they closed. However, new regulations have put a cap on this type of compensation, with mortgage broker fees limited to 3 percent of the loan principal.

When selecting a mortgage broker, ensure they are fully licensed and have an established history of providing high-quality service. You should also look into any self-reported disciplinary actions they have taken and review reviews from past customers for further assurance.

Finding a Reputable Mortgage Broker
Unfortunately, the mortgage industry can be filled with scams and ripoffs. That is why it is essential to do your due diligence before hiring any broker. Ask them questions about their experience, how they work with lenders, what services they provide and if any information about disciplinary actions are publicly accessible online.

You should also request a list of all fees and charges from any broker or lender you’re considering. If they refuse to provide one, leave immediately and search for another lender who is willing to provide an extensive breakdown of all costs involved.

Broker Fees Aren’t Always Fair
Mortgage brokers have access to a wide variety of lenders, but not all offer the same choices or rates. This makes it challenging for the broker to locate the most suitable loan for your requirements.

Even if a broker finds you the ideal loan, you could still end up paying higher interest rates than you would on your own. That is because lenders who pay mortgage brokers usually recoup their expenses through additional fees and higher interest rates.