Many borrowers hire a mortgage broker to help secure the lowest mortgage rate possible when purchasing their home. If you are planning on purchasing a home, it is helpful to understand the role of a broker and the benefits of working with one can offer during the home buying or refinancing process.
What is The Role of a Mortgage Broker?
A mortgage broker works on behalf of the home buyer during the loan process, essentially serving as a middleman between the borrower and the lender. The main priority of the broker is to secure the best possible home loan for the borrower. A broker can also help homeowners who are interested in refinancing their home. The borrower generally does not have to communicate with the lender at all throughout the process, and the mortgage broker essentially handles all of the difficult work of securing a home loan. While borrowers can get a loan on their own, it is generally easier and often more affordable long-term to hire a broker to assist in the process.
Benefits of a Mortgage Broker
Your experience with a mortgage broker may be unique, but there are certain benefits you can expect when hiring an experienced mortgage broker. The most notable benefits a mortgage broker can offer include:
- Lower mortgage rate
- Access to more lenders
- Fewer loan fees
- Easier loan process
- Time saved
Everyone has their own reason for hiring a mortgage broker. Many hire a mortgage broker to ultimately save more money long-term by acquiring a lower mortgage rate. Others, especially first time home buyers, may do so because they do not fully understand the long and complex loan acquisition process and want assistance from a professional. The best way to determine if a broker is right for you is to assess your own situation and discuss with a mortgage broker whether their services are right for you.
Shopping for The Lowest Rate
One of the first things a mortgage broker will do is assess important information related to the client’s credit and finances. They may check the client’s credit score and report, tax returns, pay stubs, and checking and savings account statements. They may also check employment information and documentation. This gives the broker a better sense of the client’s buying power, which is useful to secure the lowest rate possible when negotiating with prospective lenders.
After analyzing the financial information, the mortgage broker can discuss loan options with the client. This may include establishing an appropriate loan amount and discussing the best type of loan for that particular client. The broker will then go to work on behalf of the borrower, securing multiple loan offers from multiple lenders to compare and find the best possible rate.
Guide To Various Loan Options
Choosing the right type of loan can be difficult for home buyers. A mortgage broker makes this process easy by shopping for multiple types of loans for the buyer from different lenders, helping them to get the best mortgage rate possible. The most common types of loans include:
- FHA – Federal Housing Administration (FHA) loans are a great option for first-time home-buyers with a low credit score. They require a minimum down payment of 3.5 percent of the purchase price, and offer competitive mortgage rates.
- Conventional – Conventional loans are often the best option for homebuyers with a credit score of 620 or higher. The minimum down payment for a conventional home loan is 3 percent of the purchase price.
- USDA – The U.S. Department of Agriculture (USDA) loan program is for buyers interested in purchasing in a more rural part of the country. There is often no down payment required, and it offers generous mortgage rates.
- VA – Many consider the Veteran’s Association (VA) loan program to be the most generous, although only members of the military and their spouses qualify.
Each type of loan has unique benefits. A broker can explain the pros and cons of each option to the buyer and help them decide which type of loan program is most appropriate.
Variety of Loans Offered
A skilled mortgage broker will solicit multiple loan offers to secure the best rate possible for the home buyer. After choosing a loan program, they will find the right lender for the buyer. If the buyer has certain preferences, such as lower closing costs or the lowest possible cost for mortgage insurance, a broker can take these into consideration and represent the buyer during the negotiation process with the listing agent and lender.
Reach Out to a Mortgage Broker Today
If you are interested in purchasing a home or want to refinance your home, reach out to our team at My Lending Pal today to chat with an experienced mortgage broker. We understand the importance of securing the lowest possible mortgage rate to allow for more long-term financial freedom, and our team is committed to helping our clients do just that. Our experts are available to discuss the different types of loans available and how we can help you secure the best rate for your home purchase.
