You can’t start and finish the home-buying process overnight. Rushing through the steps isn’t recommended either, since buying a home is one of the biggest investments of your life. One of the keys to buying a home is financing it. You also don’t want to rush through buying insurance, since good insurance can make or break it for you in a tight spot. But to get the mortgage or insurance you want, you’ll need a trustworthy broker. To avoid getting scammed or employing the services of an unethical broker, take a few precautions.
- Make sure your broker is properly bonded. To legally operate, mortgage and insurance brokers must buy a bond. Brokers who purchase surety bonds guarantee that you cannot lose money in case they mismanage your money or fail to do their job. Confirm that the broker is licensed in your state. If your broker is in New York, they should hold a surety bond in New York.
- Search thoroughly for a reputable broker. The general Internet search isn’t always enough. Though if you limit your search with specifics such as “mortgage broker surety bond New York,” then you might yield better results. Contact organizations (National Association of Mortgage Brokers, Mortgage Bankers Association, National Association of Professional Insurance Agents) for help. Family, friends and future neighbors can usually suggest an honest broker.
- Do a background check. If the broker refuses to give you references or gives you phony ones, that’s a deal breaker. It takes one phone call to your local Better Business Bureau to find out if customers have filed complaints against the broker. However, to be a part of the BBB a company simply pays the bureau. So contact your state insurance department to investigate the conspicuous broker.
- Look out for false claims. If a broker offers coverage with huge discounts (30 to 50 percent), think twice before signing anything. Find out what the real range is on coverage. Beware of super-low interest rates and insurance premiums. Some brokers dangle these as part of a bait and switch. Other brokers can identify bait-and-switch offers for you.
- Pay wisely. Checks and money orders are the reliable ways to pay your premiums—never cash. Make copies of your payments, insist on getting a receipt and pay the insurance company instead of the broker.
- Read before you sign. It might be tedious, but reading everything before you buy coverage could save you. Don’t sign blank forms and photocopy all of the forms you do sign. Once your broker willingly covers the details and all forms are signed, then buy your coverage.