Now that HELOC lending standards have become tighter, prospective borrowers may want to consider working with a mortgage broker. Mortgage brokers can’t change the standards set by banks. But, they can explore a variety of lending options with you and advocate on your behalf.

The Problems of Working Directly with a Lender

When you go to directly to a lender, such as Countrywide, you are probably going to work with an unlicensed employee who doesn’t neccissarily know much about loans. Representatives for lenders don’t have to undergo the same kind of training and testing that is required for mortgage brokers. The employee that helps you only has access to the loans provided by his employer. Due to inexperience, he may not be able to manage problems when the arise. (I’m not saying all of these representatives are unskilled. But, in my experience, many really don’t know much about the mortgage business. When I bought my first home, I asked my Countrywide representative what “APR” meant. “Um, I don’t know,” he said. “I don’t think that’s important…”)

How a Mortgage Broker Can Help

When you meet with a mortgage broker, you know that he’s met some minimal licensing requirements. A capable mortgage broker will know the ins and outs of the system and be able to find the best HELOC possible. If one lender won’t work for your situation, he can look for another. Experienced mortgage brokers should also be able to mitigate problems with the underwriter. If your HELOC loan application doesn’t pass the automated desktop underwriting system, your broker may be able to convince the underwriter to review the material and do the underwriting manually. This is assuming, of course, that your application should be able to pass due to a special circumstance. If you come nowhere close to meeting the guidelines, your chances are slim to none.

Choosing a HELOC Mortgage Broker

When choosing a mortgage broker, ask for recommendations from people you trust. Find someone who has a lot of experience working with HELOC clients. Remember: not all mortgage brokers are trustworthy or are skilled with helping home equity customers. Do not pay your mortgage broker anything upfront. When the broker is paid at the closing of the loan, he has a greater incentive to make your HELOC go through.

See Also:

How to Negotiate the Best HELOC Rates and Terms

Lender Obligations Under the Truth in Lending Act

Tags | Heloc, heloc mortgage brokers, home equity loan, lending standards, underwriting