Saving on Loan Broker Fees

If you don’t have the time, energy, or desire to shop around for a loan, a loan broker can do the hard work for you. A broker has an established relationship with many lenders and will pass your information along to several on your behalf. Using loan brokers can save you a lot of time and take the hassle out of the process. These services are not free however. Here is what you should know about broker fee’s, and how you can save money.

Understand What You Are Paying For

You can factor in at least 1% above the amount of the loan you are going for in fee’s. Many loan brokers will also charge for paperwork, phone calls, and any time spent on the process. The problem with this is that the fees can be high.

However, brokers are heavily regulated. They can only be compensated for the value of the work they actually perform. Excessive fees can violate federal laws and regulations. Read through your broker agreement very carefully before you decide to sign anything.  A broker must provide you with a good faith estimate and truth in lending to demonstrate the amount of fees that they will charge for their services.

Know Your Credit Score

Even though you are working through a broker, you should still know your credit score. Knowing this will save you from fraudulent scams. Many borrowers ended up paying higher rates when they had lower credit scores. Find out your score and find the average rates in your area to help you save money and avoid bad situations.

Compare Fees
Don’t be afraid to compare loan fees. Many people assume that all brokers will be about the same, and this is just not true. Even though loan brokers are regulated, there is still room for negotiation when it comes to the fees and rates because brokers must compete for your business.

Watch Interest Rates
You may be able to get a better rate even after you’ve locked in to the rate. If interest rates start to drop before you officially close on the loan, you can ask to have the rate float down. In fact, you should protect yourself against rates dropping by asking the broker up front to commit to a lower rate if interest rates drop before the paperwork is signed.

There are many smart ways to save money and make sure you don’t fall victim to a bad loan broker. Be informed, understand what you are reading, and know how to compare to save money on broker fee’s.

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