The Broker Agreement is a contract between a potential homebuyer and a broker that describes the broker’s duties and the compensation to be paid. The broker usually will search for the best loan, and the broker’s fee may be a dollar amount or a percentage of the loan amount.
As a tip, be sure that you know how much the broker will be receiving from the lender; it is your right to know this information because it affects money you will be receiving. Never sign a broker agreement that contains blanks or information you do not understand.
There are some general tips that will assist you in reviewing a broker agreement. These tips are:
- review the contract before making any agreements with the broker and before paying any money
- don’t let the broker look for a loan for you until you have read and agreed to the contract
- be sure to get a copy of the contract
- look at the amount of the broker fee, or the amount the broker expects to be paid
- find out who the broker says is employing him/her, it could be just you or both you and the lender
- find out if the broker is getting money from the lender as well as from you
- negotiate everything! You can say "no" and walk away at any time
- Shop around for the lowest rates appropriate for the loan amount
It is very much advised that you seek an attorney to help understand a broker agreement and catch any hidden terms that you might miss. Brokers can be very useful in speeding the process of getting a loan, but many brokers work with banks to get the highest interest rates and the most charges that they think they can get. Consult a mortgage attorney to help negotiate down all of these unnecessary charges.