When you’re in the market for a new home, finding the perfect property is equally as important as securing a competitive mortgage. That’s where a mortgage broker comes in.
They can save you tons of time and money by shopping around for the best mortgage rates and best lender for your financial situation.
What a Mortgage Broker Does
In a nutshell, a mortgage broker’s job is to research lenders and narrow down your best options on the market.
But in order for them to effectively do their job, the borrower must be willing to provide the same information that they would hand over to a loan officer at a bank to get the process started. This includes:
- Identifying information so they can access your credit report
- Pay stubs and tax returns to verify your income
- Employer contact information to confirm your employment
- Financial statements
Otherwise, the mortgage broker will not be able to shop your information around with potential lenders.
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How a Mortgage Broker Can Help You
Shopping around for a mortgage is no easy feat when you’re juggling several balls in the air. But when you solicit the help of a mortgage broker, all you have to do is hand over your information and let them do the work for you.
Even better, they’re usually able to get the transaction done in a fraction of the time that it would take the average consumer.
Should You Work With a Mortgage Broker?
There are several other benefits of hiring a mortgage broker. Here are a few to keep in mind:
They are licensed professionals.
Mortgage brokers are licensed professionals and experts in their industry. While they must operate within certain guidelines, they are also knowledgeable enough to navigate the mortgage process and anticipate any issues with getting funding that may arise.
You can also have a peace of mind that you’re in good hands since professional licensure is required to hold this position.
They have access to a vast network of lenders.
Whether you have a quirky financial situation that could require a ton of back and forth with lenders or are the perfect candidate, most mortgage brokers can find the ideal loan product for you.
They have access to a large network of lenders, and direct contacts with those lenders that they work with on a consistent basis.
So, chances are they can jump through the hurdles much quicker than you could. And when you’re dealing with tough underwriters, it pays to have a connected professional on your side to help you get approved.
They handle the entire mortgage process from start to finish.
From submitting the initial application to working with lenders to get the loan closed, the mortgage broker has you covered. All you have to do is gather all the necessary paperwork in a timely manner and respond promptly to any additional questions or requests they have to get the loan funded in a jiffy.
Some deals aren’t final.
Oftentimes, good faith estimates provided to the broker by the lender are an adequate representation of what sort of mortgage terms you will receive from the lender. However, they are in no way legally binding and could change before you close on the home loan.
You may qualify for a better deal with your financial institution.
Do you have a solid relationship with your financial institution? If so, you may be able to work with a loan officer that can get you qualified for one of their mortgage products.
You may also be able to walk into a bank and qualify for a competitive financing offer without the assistance of a broker due to your strong credit history and overall financial situation.
Not all banks work with mortgage brokers.
The mortgage broker will shop around to land you the best deal, but some of the major banks may be excluded from their options. Reasoning: following the latest housing market collapse, some of the major banks stopped working with mortgage brokers and will only entertain applications submitted directly by customers.
Can You Afford a Mortgage Broker?
It depends on the purchase price of your home and how much cash you have at your disposal. But keep in mind that mortgage brokers are paid at closing, and you may be able to roll these costs into the loan.
Compared to the value they can provide, the fee for using one is minimal. In most instances, they will collect between 1 and 2 percent of the sales price as their commission.
While this may seem like a hefty amount, it beats settling for a home loan with a steep interest rate since chances are you’ll spend a lot more in interest over time than you would have to pay the broker.
In some instances, the broker may be able to find a lender that will pay their commission. If so, you won’t be responsible for paying anything out of pocket.
How to Find a Mortgage Broker
There are scores of mortgage brokers to choose from, so here are some tips to help you narrow down your search:
- Ask for referrals from relatives, friends and your realtor.
- Verify their licensure by using National Mortgage Licensing System.
- Check their affiliation with Professional associations, like the National Association of Mortgage Brokers.
- Analyze customer reviews to see if they’re reputable.
- Confirm fees since commissions vary across the board.
Shopping around for a home loan can be tedious, but a mortgage broker can ease a bulk of the stress. Plus, you could save a bundle in interest over the life of the loan by securing a product with a low interest rate.