Dealing With Upfront Mortgage Brokers

Upfront mortgage brokers (UMBs) are mortgage brokers who are committed to work in a completely transparent, upfront, explicit way. Upfront mortgage brokers are totally on the side of the customer. Dealing with an upfront mortgage broker is different than dealing with a regular mortgage broker because you, the borrower, have more power and knowledge.

The Role of Upfront Mortgage Brokers

Like regular mortgage brokers, upfront mortgage brokers are responsible for shopping around for the best pricing. But there are many things that make upfront mortgage brokers stand out from the rest of their field.

  • UMBs must put in writing all of the fees that they charge in association with intermediating a home loan deal.  These fees must be presented upfront before any negotiations take place.
  • Upfront mortgage brokers must present the wholesale price of a home loan to the borrower.  The wholesale price is the price of the loan originally, before the markups associated with brokering the deal are added in.  This process prevents upfront mortgage brokers from profiting by enticing naïve borrowers into purchasing unfairly high priced loans. 
  • As the in-between, UMBs credit the borrower with the any rebates given from the lender.  Upfront mortgage brokers are honest and do not keep the rebates for themselves. 

    The Role of the Borrower

 

  • Dealing with upfront mortgage brokers means ignoring the too good to be true, extremely low rates offered by regular mortgage brokers. 
  • With UMBs, you, the borrower, must trust and respect the services that the broker is providing. The amount that you pay for these services will be negotiated by you and the UMB and will not change after a value is agreed upon. The cost for services can be a percent of the overall loan, a number of points, or a fixed amount. 
  • Because you will be seeing the wholesale prices of the loans, there is no reason for you to shop around for a specific mortgage. Instead, shop for a broker who will look through the rates for you at a faster rate and in a more complete manner. 
  • Just as the UMB has a commitment to be honest with you, you have commitment to be honest with him/her. Do not submit multiple loan applications to multiple lenders or brokers with the intent to back out of the deal that you have with the UMB. Also, know that once you lock in a rate with a UMB, you are required to stick to and pay that rate.