Many people looking to buy a home often wonder if they should use a mortgage broker. Often, the answer is yes. Most brokers agree that regardless of whether you’re buying or refinancing, it’s always best to work with someone who can specialize in all areas of financing.
More importantly, when it comes to mortgages, you need to understand the difference between banks and brokers, how they offer different services, and their pros and cons.
Here’s what you need to know about using a mortgage broker:
What Is A Mortgage Broker?
A mortgage broker is a person who works with a client to assess their needs, shop for appropriate financing and handle the application process. Mortgage brokers work independently or for mortgage brokerage firms, banks, or other financial institutions. They do not lend themselves but rather connect clients with lenders who will fund the loan.
A mortgage broker can help with :
- Assessing the client’s financial needs
- Obtaining an appraisal of comparable homes and determining future earnings potential.
- Identifying potential lenders and lenders’ requirements for lending.
Why Would You Choose A Mortgage Broker Over A Lender?
A mortgage broker may be able to help a client in a couple of ways. They can offer the best financing plan to their customer, as well as offer a complete range of mortgage products, such as adjustable-rate mortgages or 100% financing.
Many people don’t realize that different types of lenders have different lending criteria and their own particular rules and regulations regarding loans. This means you can’t just walk in and expect to get the loan you want. Just because a lender is willing to lend money doesn’t mean certain types of borrowers will qualify.
How To Find A Mortgage Broker
Get referrals
Contact people you know, and ask for recommendations. You could also get a recommendation from an agent or your real estate agent.
Find out how they get paid
Mortgage brokers work for a commission, usually paid by the lender. Make sure you find out how much their commission is and how it compares to any fees you’ll pay your lender.
Ask who they work with
Mortgage brokers typically work only with a particular type of lender.
Ask about the process
Find out whether they’ll work directly with you or will pre-screen your application and submit it on your behalf.
Check their license
In most states, you must be licensed or registered to be a mortgage broker.