Working with a mortgage broker can save you time, effort and money. Turning to a mortgage broker can be worthwhile if they can secure a better mortgage than you can find on your own. As long as you understand how the broker is compensated, and that compensation doesn't mean you get a worse mortgage, using a broker could save you a lot of time buying prices on your own. However, it's best to compare a broker's offers with a couple of lenders you've checked yourself to verify that you're getting a good deal.
Whether it's better to work with a mortgage broker or get a mortgage loan directly from a bank depends on your financial situation and preferences. For example, if you're having trouble qualifying for a mortgage or you highly value convenience, a mortgage broker may be worth it. On the other hand, working directly with a bank might make more sense if you're comfortable calculating some numbers and want to feel more in control of the homebuying process. A mortgage broker acts as an intermediary between you and the lenders when you are looking for a home loan.
Most mortgage brokers work with a variety of lenders, including banks, credit unions and private mortgage companies, allowing them to offer you a wider range of options. If you have less than perfect credit, are self-employed, or have other special circumstances, this additional flexibility can help you find the best option. Lenders offer wholesale loans to a mortgage broker and are therefore able to offer the best rates available on the market, typically reducing the total cost of the loan to the customer. An accredited mortgage broker will reveal how you are paid for your services and will detail the total costs of the loan.
While a mortgage broker can help you in your homeownership process, it's critical to consider whether you need someone to act as an intermediary between you and the lenders, or if you're willing to spend time finding a good deal yourself. Because lenders who work with brokers tend to experience a smoother process, you can get a discount on your loan by going through a broker. You should expect your mortgage broker to help pave the way, be available to you, and advise you throughout the closing process. This is because some work exclusively with mortgage brokers and rely on them to obtain suitable customers.
A mortgage broker acts as an intermediary between a financial institution that offers loans secured with real estate and people who want to buy real estate and need a loan to do so. Mortgage brokers can be particularly helpful if you have a unique circumstance that makes you an unconventional borrower, said NAMB President Kimber White. The total amount paid by the borrower will vary depending on the type of loan, the broker they use, and how much the broker earns in fees from the lending institution. To get the best of both worlds, get loan quotes from at least one broker and bank when looking for a mortgage to see which one can offer you the best deal.
With access to a wide range of mortgage products, a broker can offer you the most value in terms of interest rates, repayment amounts and loan products. This could help you determine right away if your bank or a mortgage broker is likely to offer you the best rates and terms. If your mortgage application involves challenges, an agent who knows which lenders are most flexible can help you. The best route for you could decide if you already know a good mortgage broker or a bank loan officer.
However, it's always useful to ask what the agent's relationship is with the broker and if the agent has caused buyers to work successfully with this broker in the past. Some lenders may offer homebuyers the same terms and rates they offer to mortgage brokers (sometimes even better). Costs vary widely, but a mortgage broker generally earns between 1% and 3% of the total loan amount. A mortgage broker can also collect the financial documents you'll need to apply for a loan and submit a pre-approval request on your behalf, in addition to providing information about the local market.