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Mortgage Brokers

If you need to refinance, you may want a mortgage broker to help you find the best loan (or any loan at all). Like real estate brokers and agents, mortgage brokers are regulated in all but one state, and licensed in most. You usually can find out whether a particular mortgage broker is licensed by visiting the website for your state’s regulatory agency.

Mortgage brokers, as a group, have taken a lot of heat for the housing slump. Honest and ethical brokers are lumped in with the ones who misrepresented to their customers the nature of the loans they were getting and who handed out loans to people who couldn’t afford them. Unfortunately, during the housing bubble, unethical mortgage brokers easily out-competed those who were ethical, because by all accounts it was comparatively easy for just about anyone to get a mortgage. In fact, the fault is better laid at the doorstep of the banks, which themselves were usually just an intermediary for Wall Street investors who bought mortgages on the say-so of rating agencies.

It’s also hard to blame mortgage brokers for the generally held belief that real estate prices would continue to appreciate forever. After all, the high wizards of our economy—including Alan Greenspan himself—saw no reason to worry.

My advice is to use mortgage brokers for what they are best at: finding a source of refinancing at the lowest available interest rate. But when it comes to understanding how the mortgage works and whether or not you can afford it, keep the old Latin phrase caveat emptor (let the buyer beware) firmly in mind.