Mortgage brokers check wtih different lenders for the rate and type of mortgage that best fits your needs. Your broker works to originate and process your loan with a number of lenders. While this can save you a lot of time and energy, there are some important things you need to know.

Mortgage Brokers are licensed by the State of New York’s Banking Department.

Mortgage brokers get paid a fee for their services that may be separate from, and in addition to, the lender’s origination or other fees. A broker’s compensation can be in the form of “points” paid at closing, as an add-on to your interest rate, or both.

That’s why you need to ask each broker you work with how he or she will be compensated so that you can compare their different fees. Be prepared to negotiate with mortgage brokers and lenders over their fees. Keep this in mind: New York mortgage brokers and lenders can always negotiate their fees. New York City residents live in one of the busiest and most crowded real estate markets in the country. If the mortgage broker or lender doesn't earn your business, they know you’ll shop around for a better deal. Negotiate the broker’s fee upfront, before any work has been done to secure you a good loan.

Mortgage Rates, Points, and Fees: Information to Get From Mortgage Brokers and Lenders

Rates

• Ask each lender and broker for a list of its current mortgage interest rates and whether the rates being quoted are the lowest for that day or week.
  
  
• Ask whether the rate is fixed or adjustable. Keep in mind that when interest rates for adjustable-rate loans go up, generally so does the monthly payment.
  
  
• If the rate quoted is for an adjustable-rate loan, ask how your rate and loan payment will vary, including whether your loan payment will be reduced when rates go down.
  
  
• Ask about the loan’s annual percentage rate (APR). The APR takes into account not only the interest rate but also points, broker fees, and certain other credit charges that you may be required to pay, expressed as a yearly rate.

Points
Points are fees paid to the lender or broker for the loan and are often linked to the interest rate; usually the more points you pay, the lower the rate.

• Check your local newspaper for information about rates and points currently being offered.
  
• Ask for points to be quoted to you as a dollar amountÑrather than just as the number of pointsÑso that you will actually know how much you will have to pay.

Fees
A home loan often involves many fees, such as loan origination or underwriting fees, broker fees, and transaction, settlement, and closing costs. Every lender or broker should be able to give you an estimate of its fees. Many of these fees are negotiable. Some fees are paid when you apply for a loan (such as application and appraisal fees), and others are paid at closing. In some cases, you can borrow the money needed to pay these fees, but doing so will increase your loan amount and total costs. "No cost" loans are sometimes available, but they usually involve higher rates.

• Ask what each fee includes. Several items may be lumped into one fee.
  
  
• Ask for an explanation of any fee you do not understand. Some common fees associated with a home loan closing are listed on the Mortgage Shopping Worksheet in this brochure.

Mortgage “Points” are Fees
When you apply for a mortgage, the lender has to do a number of things to see if you qualify for a loan. This process, or “origination,” includes preparing, submitting, and evaluating your loan application. This generally includes a credit check, verification of your employment, and an appraisal of the property that you’re buying.

When mortgage brokers talk about ‘points,’ they are referring to the “origination fee” that the lender is going to charge you for originating a loan. Points are generally paid at closing.

Fees: They Can Add Up Quickly
A home loan often involves many fees, like points, loan origination or underwriting fees, broker fees, as well as transaction, settlement, and closing costs. Every lender or broker should be able to give you an estimate of its fees. Many of these fees are negotiable.

Some fees are paid when you apply for a loan (such as application and appraisal fees). Others are paid at closing. In some cases, you can borrow the money needed to pay these fees, but doing so will increase your loan amount and total costs. “lNo cost” loans may be available, but in reailty, they do have a cost: generally in the form of higher interest rates.

Ask for an explanation of any fee that you do not understand. You’re making a big investment in your new home. Why shouldn’t you know the fees folks want to charge you to make that happen?

Qualifying For a Mortgage
To qualify for a mortgage, a variety of different factors are taken into account. Your financial history and whether you can be deemed a good credit risk by the lender will help determine if you can get a mortgage. This will likely include information about your:

• Credit record and history;
  
  
• Savings and current financial health;
  
  
• Annual income, and sources of income;
  
  
• Current job and employment history;
  
  
• Whether any creditors have any legal judgments or liens against you; and your
  
  
• History of home ownership
  

Different Types of Mortgages
A mortgage involves giving an interest in property (here, your condo) as security for a loan or other obligation. It is the most common method of financing real estate transactions. The condo buyer is known as the ‘mortgagor,’ the party transferring the property interest.

Your lender -- the bank or other financial company letting you borrow money to buy the condo -- is called the ‘mortgagee.&rsquo.

To ensure that you keep your promise to repay the lender the borrowed money, with interest, the lender takes what’s known as a “security interest” the property. If you fail to keep your end of the bargain by defaulting on your mortgage payments, the lender can start foreclosure proceedings to hold you in default of your repayment obligations. This accelerates any long-term repayment obligations spelled out in your mortgage, and will add even more fees to the cost of your original loan (e.g., legal fees related to the foreclosure, auction costs).

Unless you are able to work out a new set of repayment obligations with your lender, a court can order that your condo be auction off to the highest bidder. Any money raised from the foreclosure sale will be used to first pay your lender back the money it loaned you, with interest, legal fees, and other court-ordered costs. If there is any money leftover after the foreclosure auction, it should wind up in your hands.

However, you’ll probably already have been evicted from the condo by the new owners by that time.