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How Can You Avoid Being Overcharged by a Mortgage Broker?

Ever since the advent of mortgage brokers, there are two types of them who have evolved. On one hand is the ideal mortgage broker who has the knowledge and the training and engages the ethical practices of his or her field of endeavor. There is, on the other hand, a mortgage broker who has the same traits like the first one except that he uses unscrupulous methods in his or her business dealings, one of which is to overcharge the fees of clients.

There are many steps to follow to refrain yourself from getting the services of an unscrupulous mortgage broker. The first one is to choose a member of the National Association of Mortgage Brokers (NAMB). A member is regulated to comply with the NAMB's Code of Ethics. The provisions of the Code say it all that encompasses honesty, integrity and compliance with the laws of the government. When guided by these provisions, the mortgage broker becomes honest from the very beginning till the end of the transaction.

The second step is for you to do the shopping of properties and lenders. It is true that it consumes much of your time, energy and money but then this is badly needed if you are to validate the broker's resource of information. While it might be resource-consuming on your part, you have to be aware that you have nothing lose. In fact, you are gaining some knowledge that can turn you into a sophisticated borrower or buyer, one who is confident of what he or she wants that is simultaneously sending a message to the broker that he or she is not dealing with a na´ve or ignorant client. And the broker becomes conscious and impress with your no-nonsense background that any overcharging fees on his or her part is definitely out of the way.

The third guideline is for you to be upfront with a prospective mortgage broker. Tell him truthfully about your being budget-conscious. This gives the broker the message to be straightforward as well in his or her engagement with you. It is a good start for the broker to be honest with the fees that he or she is charging you. At this point you can start the negotiation, stating the reasons why the broker should lower the cost of the services being availed of, after all you have a good credit history and your credit standing is high that makes it more convenient for the broker to shop and easier to find more options for you to choose from. But when you have a bad credit history and a problematic credit score, the broker may probably charge you higher but do not also hesitate to negotiate with a lower fee as long as you can justify it. It really depends on your negotiating skills if you are able to convince the broker.

The rule of thumb is dependent on your financial standing. When the financial situation you are in is simple, the charges are less. But when it is accompanied by loan payment defaults and many more complexities, the harder and more difficulties the work of the mortgage broker becomes and eventually, the higher the charges or fees the broker wants. But it does not hurt if you still want to negotiate the terms and conditions laid down by the broker. Just be sure to rationalize it pretty well.

After the negotiations have been finalized, the agreements must be put into writing. Never allow it to be at the verbal level. It might cause either of the parties to renege on few terms agreed upon and that is the time that more problems and misunderstanding arise that mar the transaction.

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