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Handling certain aspects of your own finances can be practical and even cost-effective, if done right. Other times, you're far better off hiring a professional.

The calculation can get dicey when you are trying to decide whether to use a broker.

Brokers can provide valuable access and advice, but they work on commission and typically aren't required to put your interests ahead of their own. So how do you know when a broker might leave you better or worse off?

Here are five situations when you might consider hiring a broker:

Investing

Hiring a full-service stockbroker hasn't been necessary since Charles Schwab opened his discount brokerage in 1975. Investment expert Jim Jubak fears that many people who use stockbrokers these days are wasting their money.

"You've got people with that title who are no more than order takers, who don't have an idea in their head except what the sales staff told them in the morning meeting," said Jubak, who writes for MSN Money and his own JAM Newsletter. "What you really want is someone who's been around awhile, who's cynical about his company because he's taken clients down the company path and burned them."

You're unlikely to find those with the appropriate amount of cynicism and experience at the big, full-service brokerages, he said, because most either "get kicked out" or quit to set up their own shops.

Image: Liz Weston

Liz Weston

If you're content to match the market rather than try to beat it, you probably don't need a broker at all. Instead, you can invest in index funds and exchange-traded funds through a discount brokerage.

If you want to be an active investor, though, finding the right investment professional can be worth the effort. Jubak recommends looking for registered investment advisers, who have a fiduciary duty to put their clients' interests first, to act as sounding board.

To find one, start by asking other investors you respect. Some registered investment advisers are also financial planners, so you can check with the Financial Planning Association or the National Association of Personal Financial Advisors. Then check their background using FINRA's BrokerCheck, a free site run by the Financial Industry Regulatory Authority.

Conclusion: Brokers may be worthwhile for active investors.

Taking out a mortgage

If you're a first-time homebuyer or don't want the hassle of shopping for a home loan, you may be tempted to use a mortgage broker. These professionals can tap networks of mortgage lenders and guide you through the application process.

But you can't expect to get the best rates and terms if you talk to only one source, said real estate expert and author Ilyce Glink of ThinkGlink.com. That's because mortgage lenders, who may be paid commissions by the borrower or lender, are not required to put your interests ahead of their own.

"Nobody's a fiduciary to you," Glink warned. "Nobody's in your corner."

People who want a good mortgage deal need to shop hard, consulting a variety of sources and comparing offers. Even though most mortgages these days are sold to government-run agencies Fannie Mae and Freddie Mac, lenders might have different policies that can affect the cost and terms of the mortgage you're offered.

"It's not really (a choice between) doing it yourself and hiring a broker," Glink said. "There's a lot of work you need to do yourself regardless."

To make shopping easier, first decide what type of loan you want. The three most popular types include a 30-year fixed rate, a 15-year fixed rate and a 5/1 adjustable-rate mortgage, which is fixed for the first five years before becoming adjustable.

Then decide if you want to "buy down" the rate by paying points. People who expect to remain in the home (or keep the loan) for several years may opt to pay a percentage of the loan upfront as a fee to get a lower rate.

It will be easier to compare offers if you shop for just one type of loan -- say, a 30-year fixed rate with no points -- then try to compare different options.

Glink recommends anyone who's shopping for a home loan or refinance consult at least four of the following five sources:

  • A mortgage broker (get a referral from the Upfront Mortgage Brokers Association).
  • A big traditional bank, such as Wells Fargo, Chase or Bank of America.
  • A regional bank, which may be more flexible in how they make loans.
  • A credit union, many of which offer real estate loans at good rates.
  • An online lender or broker, such as Quicken Loans, Discover, LendingTree or Zillow.

Conclusion: Shop around, even if you use a broker.

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