Image: Upfront Mortgage Brokers Upfront Mortgage Brokers Serving Florida

Published by Mark Twain Performs with permission from The Mortgage Professor, Jack Guttentag




Don't ask an Upfront Mortgage Brokerô (UMB) to quote a rate to you because you will be wasting your time and theirs.

If they do quote a rate, it is unlikely to be the best one you hear, because it will be an honest quote. Honest brokers can't compete with "sunshine blowers" who ensnare consumers by quoting prices they cannot actually deliver. The sunshine blowers have a dozen tricks they can use to raise the price once they have you on the hook.

When you deal with a UMB, you aren't shopping for a loan.  Rather, you are retaining the broker to shop for you. The broker will represent you in shopping lenders. Brokers can shop lenders far better than you, among other reasons, because they are in continuing contact with many lenders.  

For their services, UMBs charge a fee that is negotiated at the beginning. Once set, it won't be changed. You are protected against all the tricks of the mortgage broker trade.

When borrowers deal with conventional (non-UMB) brokers, they usually are not aware of the broker's fee at the beginning because the fee is included in the quoted price.  The fee is implicit, not explicit, and the broker is not bound by it. Hence, from the day of the initial price quote to the day the loan closes, you must be on your guard.

The UMB's fee will typically be a significant 4-figure number. You shouldn't let that faze you.  For one thing, the UMB is going to pass through directly to you the wholesale rates received from lenders.  These rates typically are about 3/8% below the retail rates quoted by lenders. This is the equivalent of an upfront charge of about 1.5 points, or 1.5% of the loan amount. In many if not most cases, this saving will completely cover the UMB's fee.  Furthermore, the UMB can save you a lot of money in other ways.

Bear in mind that a one-point fee is $5,000 on a $500,000 loan but only $500 on a $50,000 loan. Hence, if the UMB's fee is expressed in points, expect it to be higher on smaller loans. You should also expect to pay more if the UMB anticipates that you will be a "tough case" -- for example, you have credit problems that must be cleared up or you can't document your finances.

Robert Marley
Florida Loans on Line

Stephen Parnell

Bob Windom
Windom Mortgage Services
Sarasota, Florida

If you don't find a UMB here,  you can convert a conventional broker into a UMB for your deal. Copy the Commitment of an Upfront Mortgage Broker, and ask the brokers you approach if they are willing to do business with you in this way. If they see that you are serious, chances are they will agree.

Copyright Jack Guttentag, 2005-2014

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