The Benefits of Using a Mortgage Broker
When you decide to purchase a home, one of the first steps is finding a mortgage. Using a mortgage broker can help you find the right loan for your needs and save you time and energy.
A mortgage broker works with various lenders, including banks, credit unions, and private companies. This allows them to offer you an excellent selection of options, including loans for people with less-than-perfect credit or self-employed people.
Access to a Larger Selection of Lenders
A mortgage broker connects borrowers with various mortgage options from a panel of lenders. These include traditional banks, credit unions, and non-banks like FHA or VA loans.
They can also work with specialized non-qualified mortgage (non-QM) products that conventional lenders may not offer. A broker may also have access to faster loan approval turnarounds from a select group of lenders.
Using a mortgage broker often benefits homebuyers who their local bank or mortgage banker has turned down. With access to more lenders, a broker can turn that denial into approval by switching to the lender that best suits your needs.
Another benefit of using a broker is that they can help you quickly avoid damaging your credit score by applying for multiple mortgages. This is because each time a lender pulls your credit history, that counts as a hard inquiry that could take a hit on your score.
Better Rates and Deals
Mortgage brokers often have access to a more extensive selection of lenders than banks, which may provide you with better rates and deals. They also offer various loan options for people with less-than-perfect credit or other exceptional circumstances.
They often can contact borrowers by text message and email instead of face-to-face meetings. This makes them easier to work with for those who are introverted or prefer to communicate by other means.
Brokers are uniquely positioned to negotiate lower mortgage rates because they have access to wholesale loans, which are often more favorable than those offered by commercial banks with higher overhead costs. Moreover, they’ll know which fees lenders charge and can ask them to be waived.
Mortgage brokers provide borrowers with personalized assistance. They can help borrowers find a loan with a lower interest rate if they have challenges, such as poor credit or insufficient income.
A broker helps borrowers shop for mortgages with more flexible lenders, including non-bank and private mortgage companies. This flexibility can save a borrower time and money.
Mortgage brokers may charge a fee to assist borrowers, typically 1% to 2% of the loan amount. This fee is generally a tiny expense to most borrowers.
Using a mortgage broker can be a streamlined process. They’ll collect your information, assess what you can afford, and recommend loan options.
They’ll also submit a preapproval application for you and offer insights into the local market. These are time-saving services that can save you lots of stress and hassle.
Another benefit of working with a mortgage broker is their personalized service. They’re usually available after business hours and can handle much of the paperwork involved in the process through text, email, or Skype.
A mortgage broker also knows all the fees lenders charge, which can save you money. This can be especially helpful if you’re dealing with a lender you might not be able to get a fee waived on your own.
The best mortgage brokers have a fiduciary duty to help you find the right loan for your situation. Federal law prohibits them from earning compensation based on the size of their loan or the interest rate they choose.
A broker will know what lenders charge and will often be able to get them to waive fees you might not ask about. They will also be able to recommend lenders who are more likely to be willing to work with you if you have unusual circumstances (like gaps in employment or a thin credit file).
A broker’s fees may be higher than a bank, but the convenience of working with them can be worth it for some borrowers. They will save time and effort and will be more likely recommend a lender with the right loan for your needs.