When the housing bubble burst in 2008, millions of Americans faced the real possibility of losing their houses. In fact, the Wall Street Journal reported that one in six homeowners, including those in Illinois, wound up with a mortgage payment on a home that was no longer worth what it was originally.
A property lawyer in Chicago knows that much of the blame for these problems was placed on subprime mortgages and the lenders who pushed borrowers into adjustable-rate loans. Today, however, many buyers wonder whether a mortgage broker can help them get the best loan possible for their needs rather than working directly with a bank or lending institution.
What does a mortgage broker do?
The process of buying a home can be very time consuming, and many in Illinois and across the country do not have the spare time to research interest rates, compare lenders or search for the ideal mortgage. A mortgage broker can serve as an in-between for home buyers who want to get the best loan possible for their unique financial situations. Brokers provide their clients with a wide range of available mortgage options that are personally tailored for the client’s specific requirements.
Advantages and disadvantages of a mortgage broker
A property lawyer in Chicago knows that there are several advantages of working with a mortgage broker. These professionals can save their clients the legwork required to compare mortgage terms and rates. A broker typically has a better understanding of the terminology lenders use in mortgage contracts, and this can help protect buyers from signing paperwork that includes questionable payment terms.
Simply using a broker does not guarantee that a buyer will end up with a better deal than he or she could have found alone. Some lenders offer the exact rates and terms to homebuyers than they do to mortgage brokers, and some lenders choose not to work with brokers at all.
How consumers are protected
In 2010, President Obama signed the Dodd-Frank Act in an effort to protect consumers from some of the financial issues brought on by the 2008 Great Recession. One portion of the act changed how mortgage brokers get paid, preventing lenders from compensating brokers who could persuade their clients to sign high-interest-rate loans. Other changes include the following:
- Brokers cannot charge hidden fees
- Brokers cannot receive payment for steering clients towards affiliate businesses
- Brokers cannot be paid by both the lender and the borrower
The benefit of legal aid
When deciding whether or not to work with a mortgage broker, it may be beneficial to speak with a property lawyer in Chicago. An attorney may be able to provide advice regarding the purchase of a new home.
