Many home-buyers take out a mortgage loan to fund their purchase, and the high demand means there are a wide range of options when it comes to getting a mortgage.
Some people might go directly to their bank or credit union, while others compare prices at online lenders and dedicated mortgage companies.
However, one option that is becoming increasingly popular is using a mortgage broker to sort through the best offers and guide buyers through the process.
Before you begin talking to your bank or a private lender, here is what you should know about working with a mortgage broker.
What Is A Mortgage Broker?
A mortgage broker is a regulated and licensed financial professional who serves as a bridge between people borrowing money to buy a house and lenders such as banks.
Although brokers can originate loans, they do not fund the mortgages themselves. Instead, they provide access to loans from a range of lenders and help borrowers find the best deal possible.
The Benefits Of Using A Mortgage Broker
Below are some of the benefits that await borrowers who work with a mortgage broker.
They Manage The Entire Process
The sheer volume of available mortgages can be overwhelming, particularly to buyers who are not familiar with the ins and outs of mortgage lending.
A mortgage broker can serve as a valuable ally as people go through the rate shopping and loan application process, using their experience to provide helpful advice and guidance.
They Can Help You Find Better Deals
Mortgage brokers provide borrowers with access to a range of lenders, which means there is a wider pool of rates and loan types from which to choose. This naturally raises the chances that a borrower can find favorable terms and rates.
Some mortgage lenders work exclusively with mortgage brokers, which means that individual home buyers are not able to work with them directly for mortgages.
Moreover, brokers are sometimes given special rates from particular lenders because of the volume of business they provide, which gives their clients access to lower rates than they could have secured on their own.
Additionally, brokers can sometimes convince lenders to waive certain fees involved in taking out mortgages, such as appraisal fees, application fees or origination fees, which can save borrowers hundreds or thousands of dollars.
They Can Help With Unique Borrower Situations
Many banks’ offerings are restricted to conventional mortgages, but brokers generally have access to other types of loans, such as USDA loans, FHA loans, VA loans, and jumbo loans.
They offer a more personalized experience and can guide people toward lenders that are willing to work with borrowers who have a low down payment, bad credit, a limited credit history or a desire to avoid mortgage insurance.
Therefore, borrowers whose loan application involves some type of challenge may find that working with a mortgage broker makes the process a lot smoother and allows them to find more flexible lenders. An experienced broker will know which lenders are most likely to approve specific types of applications.
They Can Save You Time
Although it is possible to shop around for mortgage deals on your own, doing so entails filling out a significant amount of paperwork with your financial information for each application.
Working with a mortgage broker means that you only complete a single loan application, eliminating the need to go to various lending institutions and provide multiple copies of financial statements and credit reports.
Many mortgage brokers provide formal comparisons of the loans they are recommending, making it easy to sort through the cost differences, rates and other factors involved in the loans available to you.
Are There Any Drawbacks To Working With A Mortgage Broker?
In many situations, working with a mortgage broker can be advantageous. However, it is important to keep in mind that they do charge a fee for their services. In some cases, this may be covered by the lender.
Many borrowers find that the money they save over the lifetime of a loan found by a mortgage broker outweighs their fee, but it is useful to discuss the fee with the broker you are considering before moving forward.
Moreover, as with a conventional lender, it is important to choose a broker carefully. Most brokers genuinely want to help buyers and work hard to get them the best loan product for their situation.
Nevertheless, it is a good idea to ask family, friends or real estate agents to recommend a reputable mortgage broker and talk to a few potential brokers before choosing one.
Reach Out To The Experienced Mortgage Brokers
To find out more about your options for financing a home purchase, get in touch with the professional mortgage brokers at MyLendingPal for personalized service and assistance finding your ideal loan.