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Using a Mortgage Broker: Making The Right Choice
CA Gov Article, Jan 31, 2005
A mortgage broker helps you obtain a home loan. A mortgage broker may be licensed by either the California Department of Corporations or the California Department of Real Estate. Mortgage brokers make or arrange first mortgages and junior mortgages. A junior mortgage secures a loan which is secondary or junior to one or more other loans on the property. Some home loans arranged through brokers are very similar to a home loan you might obtain independently from a bank, savings and loan association (S&L), credit union, finance company, or other type of lender. Some brokers offer shorter loan terms and/or different repayment plans.
Prior to using the services of a mortgage broker ensure that you check to make sure they are properly licensed by checking with the California Department of Corporations at http://www.corp.ca.gov or 1-800-347-6995 and/or the California Department of Real Estate at http://www.dre.ca.gov or (916) 227-0931. You may also wish to check with the Better Business Bureau at http://www.bbb.org to see if the company is a member and if any complaints have been filed against the company.
The Role of the Mortgage Broker
The mortgage broker is usually an agent for the purpose of arranging the home loan transaction. This relationship imposes a legal duty on the broker to disclose to you the material (important) facts you need to know about the loan. The broker has a duty of fairness and honesty to both you and the lender. These legal duties can be important in resolving disputes which arise after the loan is made, but the best way to avoid problems and disputes is to ask questions and be sure you understand the terms of the loan and each of the loan documents before you sign.
When acting as an agent, the broker speaks for you in submitting your loan application to a lender. Make sure that you give the broker full and accurate information, and that any loan application or other document the broker prepares for your signature is accurate and complete before you sign it. Make sure you understand the terms of the loan before you agree to it.
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