Why You Need To Use A Mortgage Broker In Your Home Search
Mortgage brokers act as a middleman between the homeowner or borrower and the mortgage lender or bank. Whether it is refinancing or purchase mortgage, the brokers help the consumer qualify for a home loan. Therefore, a mortgage broker can help shop for the best rates with several lenders, as well as handle your mortgage application during the entire process. A broker eliminates the need to go to a bank for a loan, as they can work on your behalf.
What Does a Mortgage Broker Do?
As a borrower, when you get in touch with a mortgage broker and decide to work with the professional, he will start gathering essential financial information. It covers credit report, pay stubs, tax returns, employment documentation, and statements of checking accounts and savings accounts. All these are necessary to evaluate your capacity to acquire home loan financing. If you to a retail bank, they would also ask for the same documentation. So, there is no major difference in going to a bank or a broker.
If you want to apply for a refinance mortgage, the broker will check the appraised value of the property and the current home equity. They will use a mortgage calculator to determine what loan terms work best for you. The job includes setting an ideal loan amount, loan-to-value, and assessing which loan type is appropriate for the borrower.
Throughout the duration of the loan process, mortgage brokers work together with the borrowers. Besides collecting quotes and paperwork, they can test different scenarios with the use of mortgage calculators to find out the most suitable loan structure and the lowest rates available. Since they also work directly with the banks, they can search through the programs of their lending partners to get the best pricing and the right fit for the borrower.
Are These Brokers Free?
As with any financial originators, mortgage brokers charge for origination fees, which vary widely. While it may cost you some money to use a broker, they are more affordable than a big bank, allowing you to save money in the long run. The lenders that they help connect you with may compensate the broker or may need to pay the services of the broker from your pocket during the closing of the deal. If the mortgage broker is not charging you for their services, it means they are getting commissions from the lender. In such a case, you may find yourself with a higher interest rate that you need to compensate for. With this, it is better to explore all the available options to find the best combination of fees and rates.
Will Using a Broker Cost You More?
This is not always the case. As previously mentioned, a mortgage broker can give competitive rates that are better than a retail bank. Therefore, when seeking financing, consider getting a broker alongside a bank. Mortgage brokers can shop for multiple lenders simultaneously to obtain the best pricing according to your needs. But, it is also important that the broker can meet with your specific financing scenario.
The Benefits of Using a Mortgage Broker
Expertise. A lot of home buyers and borrowers are not familiar with the mortgage process, thus causing confusion at the time of the application process. This is where the aid of a mortgage broker can prove beneficial. Brokers have a vast knowledge of the mortgage process from the side of either the borrower or the lender. They give a rundown of the terms and rates from the lenders in a manner that you can easily understand. This enables you to make a well-informed decision regarding your home loan.
Pre-qualification. Do you know that every time your home loan application gets denied, it impacts your credit history? Those loan records and financial information from the lenders are accessible to mortgage brokers. They can match your records to your application and help you secure an approval. This may also help reduce the likelihood of leaving a negative mark on your credit record.
They do the research. A mortgage broker can shop around for the best mortgage products that can meet your needs. Using a broker can save you lots of time and money as they work independently from lenders and banks. Also, a broker typically follows a system to ensure that the borrower is informed and involved in every stage.
Loan comparisons. A broker will dedicate some time to know your situation, both financial and personal, as well as your mortgage goals. By doing this, they can find the best lender to match your mortgage needs. They can make a comparison through the wide range of lenders and banks that are accessible to them. In other words, you will also have access to the same information by having one broker, instead of going to multiple lenders and banks on different occasions.
Available service. Traditionally, banks are open and available to the public from 9 AM to 5 PM. But, mortgage brokers are more flexible in providing you with their services. Usually, they can accommodate your time and make themselves available even during weekends. This proves to be beneficial if you have a full-time job or have lots of responsibilities and cannot afford to meet the schedule of the lender or bank.
Links and connections. A mortgage broker has a lot of contacts, links, relationships, and connections with a wide range of lenders. With this, it is easy for the broker to identify which lender can match your specific needs. For example, if you are seeking an affordable loan and have a poor credit score, your broker will know those lenders that give affordable financing and approach the right ones for you.
Generally speaking, shopping around for a mortgage, going through the process of approval, applying for different lenders, and comparing loan estimates require a lot of your time, money, and effort. Having a mortgage broker on your side can reduce all this hard work. This may be the best option for you to get the best mortgage rates possible.