The Pros and Cons of Hiring a Mortgage Broker
Did you know that tons of people are buying homes right now? The real estate market’s booming. If you want to learn about whether you should get a mortgage broker or not, we can help.
In this guide, we’ll go over the pros and cons of a mortgage broker.
Want to learn more? Keep reading.
What Is a Broker?
Mortgage brokers are the middle person. They work with a financial institution that offers loans and people who want to buy real estate.
The broker works with both parties to get the loan approved for the individual.
A broker will also collect and verify the paperwork the lender needs from the person wanting to buy a home. Brokers will work with many lenders and offer various loan options to the borrower.
Brokers will complete transactions as a third-party person between the lender and the borrower. The broker collects the information and looks to get the best loan for their client.
The broker will work as a loan officer, collecting all the necessary paperwork.
Don’t Worry About Navigating Confusing Paperwork
Your broker will help you navigate the complex process of applying for a mortgage. The broker will explain the different rules and help you understand the terms.
You want to find someone you feel comfortable working with and who answers your questions.
Reputable Brokers Help You Find a Good Deal
Mortgage brokers will be in touch with a lot of lenders. You wouldn’t have access to all these lenders on your own. A broker will also have the insight and experience to prevent you from working with a sketchy lender.
Before you pick a broker, you should spend time learning about the broker.
You can make sure the average rate for the kind of mortgage you’re applying for is fair. Use a mortgage calculator. You can compare different rates fast and assess the mortgage broker’s credibility.
Does the Broker Have Good Access?
Specific lenders will only work with certain mortgage brokers. The lenders will rely on the broker to be a gatekeeper and bring decent clients.
You can’t call the lenders directly, usually. Brokers can get a special rate from the lender because of their business generated for them. Look for someone like Hunter Galloway mortgage broker.
Brokers Save You Time
A broker will often save home buyers time and money.
There are various fees involved when you take a new mortgage or work with a new lender. You might have to deal with appraisal fees, application fees, and origination fees.
Some mortgage brokers will even get lenders to waive most or some of the fees. You’ll end up saving thousands of dollars.
Your Broker’s Interest Might Not Match Yours
When looking for a mortgage, you want to find one with low fees and a decent interest rate. A mortgage broker will get a price from the lender when they bring them business.
The fee will often get based on the amount of the mortgage and will vary between lenders. The broker’s goal will be to get a mortgage that will end up maximizing their compensation.
During the crash in 2008, many brokers had Americans get mortgages they couldn’t afford.
If you choose to work with a broker, make sure you find one that your network recommended. This way, you can work with someone you can trust.
Broker’s Might Not Get You the Best Deal
Many home buyers will assume the broker can give them a better deal than they could get on their own.
Some lenders offer home buyers the same rates and terms that they will offer the mortgage broker.
You should consider shopping around before you choose a broker. A mortgage calculator will allow you to fact-check and see if you’re getting a good deal or not.
You Will End up Owing a Fee
Mortgage brokers will get paid by you or the lender. If the fee ends up getting covered by the lender, you might get a more expensive loan.
If you pay the fee, make sure you find out the mortgage costs beforehand. This way, you’ll understand the deal you will get. Make sure to cover fee problems upfront before signing or working with a broker.
Estimates Won’t Get Guaranteed
A broker might give you a good faith estimate when they give you the offers from lenders. The estimate means the broker thinks the estimate will be the final terms of the deal. Yet, this isn’t always for sure.
The lender might end up changing the terms based on your application. You could end up paying extra fees or a raised rate.
Specific Lenders Won’t Work With Brokers
Some lenders won’t work with brokers because the broker-initiated mortgage could go into default. The lenders will choose direct lending.
When you work through a broker, you may not have access to all the lenders. Some lenders might even give you a better deal than what you would get through a broker.
Keep Learning About the Real Estate Market
We hope this guide on working with a mortgage broker was helpful. Now that you know more about a mortgage broker’s pros and cons consider what will work best for you.
As you shop and browse the real estate market, work with a reputable broker and agent.
Do you want more real estate tips? Check out our educational resources on the blog.