Mortgage

Mortgage Brokers: What They Do and Find out how to Discover One

What is a Mortgage Broker?

A mortgage broker is someone who purchases a home loan on your behalf.

Your job is to find out all of your circumstances – down payment, loan, income, etc. – and then find the best mortgage loan for you.

Some people choose to work with a mortgage broker because it can be easier than finding a loan yourself.

But you can also shop on your own if you want.

The ability to request rates and apply online makes shopping for a home loan without a broker easier than ever.

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What a mortgage broker does

Choosing the right mortgage is almost as important as choosing the right home since you will likely be paying back the loan in the years to come.

You want to find the best rates, the lowest fees, the most reputable lender, and the loan product that best suits your needs – it's no easy task.

A mortgage broker can do this heavy lifting by identifying loans that suit your circumstances and filing applications for you.

You may even have the inside information that lenders are top rated on and can recommend products that are tailored to your finances and goals.

This is also all possible by yourself. However, if you are not keen to learn about mortgages and make the choices yourself, a broker can be very helpful.

Mortgage broker versus bank

Mortgage brokers work with multiple banks and lenders to help you find the right type of loan as well as the best mortgage rate.

A bank, on the other hand, only recommends credit products from its own portfolio. A bank can likely help you find the right type of loan, but it won't help you compare other lenders' rates to determine if you are getting the best deal.

The important thing is that mortgage brokers provide access to a wide variety of options rather than limiting you to the products only offered by a handful of lenders.

This can help you get a better loan and interest rate than if you simply looked for lenders yourself.

Should You Work With A Mortgage Broker?

Finding a mortgage broker that you trust can be a huge benefit when buying a home.

You can likely source more product options than you would find on your own, and you may be luckier dealing with them than you would with a lender directly.

You might consider working with a mortgage broker if:

You are overloaded with work and want someone else to do all the comparisons for you. You feel overwhelmed by comparing lenders and want an expert opinion. They have a spotty credit history or low credit history and need someone to help you find a lender who is willing to work with you

A broker can also help you find lenders who offer the specific types of loans you need, such as: B. a VA loan, a low down payment mortgage, or a jumbo loan.

However, it can take longer to get a loan through a broker than through a lender. A lender can "enforce" your loan if you are on a tight closing schedule. Brokers have fewer options to speed up processing. After all, they are not employees of the credit company, but an independent agent.

You also have limited control over what the lender does with your loan, which can be a problem if there is a hold-up or the loan is declined.

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What to Look For With a Mortgage Broker

It is important to find a mortgage broker that you can easily work with throughout the home loan.

By asking the following questions when evaluating different brokers, you can find one that suits your needs:

Who are the typical customers?

When looking for a mortgage broker, it is important to think about your goals. That way, you can choose a broker who has experience working with similar buyers and knows how best to help you.

For example, if you are concerned that bad credit is becoming a barrier to home ownership, you are likely more comfortable with someone who has helped people like you get a mortgage loan in the past.

If you're looking to buy a rural fixer upper, you're probably looking for someone who is knowledgeable about FHA and USDA backed mortgages.

However, if you are in the market for a luxury home, you can benefit from a broker who is familiar with jumbo mortgages.

Knowing what type of home you want and understanding your financial profile can help narrow down which brokers are best for you.

Are you licensed?

You can verify that a broker is licensed through the Nationwide Mortgage Licensing System & Registry (NMLS) website.

The Consumer Financial Protection Bureau (CFPB) notes that you can also contact your state regulatory agency to find out if the broker has ever faced disciplinary action.

What is it like to work with them?

Applying for a mortgage is an emotional process. Your decision on which lender to work with will depend heavily on them and you need to make sure that you understand the terms of the loan.

You want to work with a broker you are familiar with. One that you know will guide you through these big decisions. And a lot of that trust depends on how you work.

Think about your expectations for how you will communicate with a broker.

Would you like them to contact you regularly and get back to you throughout the process? Do you expect them to be available outside of business hours to answer questions? Do you prefer SMS or phone calls? What is your typical workload? Will you be top priority?

You may find a great broker but choose not to work with them if you don't get the personal support or the kind of customer service you need to put your mind at ease.

What is their availability?

When you're in a rush to buy a home, you want to know that your mortgage broker is ready to act as soon as you are.

Ask how many customers they typically work with at the same time and when they will be available to look for credit for you.

Someone with their hands full can't give you the attention you need to want to buy right now.

However, if you are not on a tight time frame, you can focus more on finding someone who meets your customer service and personality expectations and start the buying process in earnest when it becomes available.

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How to Find a Good Mortgage Broker

There are a few ways you can find a mortgage broker:

Websites and online reviews

You can search for a broker through websites such as FindAMortgageBroker.com or search for brokers in your area.

Check the reviews on Google, Yelp, and other review platforms for a range of experiences.

Be sure to look for comments about:

Closing timesLent successCustomer service responsiveness

This will give you an idea of ​​how communicative and helpful the broker is.

Recommendations from friends and family

Ask loved ones if they have used a mortgage broker and if they would recommend them.

People you are close to will give you open feedback on whether they liked a particular broker and what their overall impression was of working with them.

They may also contain details about professionalism or personality that you won't find in other reviews, but which can greatly influence your decision.

One question that you definitely want to ask is whether the agent thinks their needs come first.

If a friend or family member feels that their agent has put pressure on a particular lender or product, even if the client felt reluctant, treat it as a red flag.

You are taking out a mortgage and you should be sure that your broker is helping you find the best product for you, rather than working on their own behalf.

Referrals from a real estate agent

Your real estate agent can be a great resource for finding mortgage brokers. The realtor probably knows the type of home you are looking for and can recommend brokers who will work with buyers who are similar to you.

They may even have long-standing relationships with brokers and be able to make trusted recommendations based on years of professional interactions.

Brokers have a vested interest in recommending a top notch broker: if the broker fails to close the loan on time, the sale may not complete and the broker may not receive a commission.

The final result

The decision really depends on your home buying schedule and whether you believe you can get a better interest rate or better credit through a broker.

If you have worked with specific lenders before and feel confident with them, or have already received solid referrals from friends and family, going straight to the lenders may be your best bet.

However, if you want a broker's expertise these can be a great addition to your home buying team.

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