A mortgage broker is a third-party intermediary who collects information from you and then connects you with multiple lenders to secure the best home loan possible. They collect all necessary paperwork and take care of everything from start to finish – from applying for your loan to closing. Furthermore, they offer expert advice on which loan option would be most suitable for your circumstances as well as how much you can borrow.
The advantages of working with a mortgage broker
The primary advantage to using a mortgage broker is their access to more lenders than you would if going directly through your bank or credit union. This can give you access to better and faster deals on mortgages, especially for government-backed loans or more specialized types.
For instance, if you need an FHA or VA loan, a mortgage broker can connect you with lenders who offer these types of mortgages. They also keep you organized throughout the entire process and remind you of any requirements as your application progresses.
Another advantage of working with a mortgage broker is their expertise on loan financing and experience dealing with unique financial situations. As such, they may offer more tailored loan solutions for non-traditional borrowers such as freelancers or those with low credit scores.
Borrowers who have difficulty accessing mortgages tend to have more challenges than traditional homebuyers, so brokers can often assist these borrowers in finding better deals. Furthermore, brokers provide guidance on applying for a loan, explain the application process and advise you on which documents must be brought with you in order for your loan application to be approved.
Selecting the Appropriate Broker
Before selecting a mortgage broker, be sure to inquire about their fees and payment procedures. Furthermore, inquire what lenders they work with; confirm if they are licensed in your state.
A good mortgage broker will strive to get you the lowest interest rate and terms on your loan. They may even be able to negotiate a special rebate, known as a Yield Spread Premium, on your behalf, which could save significant money over the life of the loan if chosen correctly by an experienced lender.
Additionally, request them to provide you with a reasonable estimate of your loan and closing costs. While this cannot guarantee you the best deal, it can give an idea of what to expect and whether you are getting a fair deal or not.
Before hiring any mortgage broker, it’s wise to interview them first. Doing so allows you to assess their level of expertise and understanding of your unique mortgage needs. Be sure to inquire if they have worked with clients like yourself previously and how they intend to utilize this experience for your benefit.