What Does a Mortgage Broker Do and Why Use One?
Mortgage brokers are licensed professionals that act as mediators between homebuyers and lenders. It is their legal and ethical duty to ensure the loan they arrange is in the best interests of their clientele.
They may provide access to lenders you wouldn’t get otherwise and can often negotiate better rates for you. Furthermore, they can help determine your borrowing capacity and understand common industry terms.
They Work with Lenders
Mortgage brokers have direct connections to multiple lenders (including banks) and can make it easier for you to compare mortgage options. This may be particularly helpful if your financial circumstances require customised solutions or require something specific such as an adaptable product that will meet all your needs.
Brokers typically charge fees, which could range from a percentage of loan amount or flat fee. You should carefully evaluate any such fees against potential savings due to lower interest rates when considering whether working with a mortgage broker will be cost-effective for your situation.
If you work with a mortgage broker who doesn’t pay their own fee, they may steer you toward loans which generate the highest commission for them – known as preferred lender steering – which could ultimately increase costs for you.
They Help You Find the Right Loan
Mortgage brokers assist their clients in understanding all the available loan options and compiling the necessary documentation needed for application. Furthermore, they serve as mediators between borrower and lender during the approval process.
An effective broker has extensive knowledge of the products offered by multiple lenders and can quickly assess which one will meet the borrower’s individual needs and goals best.
A skilled mortgage broker can also negotiate fees and interest rates on behalf of their borrower, potentially saving them hundreds or even thousands of dollars in fees and rates. Under federal law, mortgage brokers must always have their client’s best interests at heart and often receive volume discounts from lenders that result in reduced rates for them – one reason many prefer working through mortgage brokers rather than directly with a lender.
They Save You Time
Mortgage brokers have access to a wider network of lenders than traditional banks can, giving you access to loans that may otherwise be hard for you to secure on your own. Furthermore, mortgage brokers can help guide the loan application and approval processes while potentially negotiating lower fees such as application and appraisal charges with lenders.
Mortgage brokers can save you time and energy by handling the work of loan comparison for you, often having more experience than loan officers working directly for lenders. They can also provide guidance regarding which loan type might best suit your financial circumstances.
However, mortgage brokers don’t work for free; instead they charge fees of between 1% and 2% of your loan amount that may be included as closing costs or paid directly by you as the borrower. It is essential that borrowers understand these fees and their impact before choosing a broker.
They Can Help You With Complex Mortgages
Mortgage brokers work with various lenders that provide different loan products, giving them access to multiple loan products for clients’ specific financial situations. Being independent, mortgage brokers also keep clients’ needs front of mind when selecting loans.
Knowledgeable mortgage brokers can make all the difference for clients when selecting their ideal loan type and deal. By explaining all available loan types to their clients, brokers are often able to explain which loan best meets their individual needs and goals.
As such, mortgage brokers can help expedite the home-buying process by handling all paperwork and communicating directly with solicitors on their clients’ behalf, saving time and reducing stress – particularly helpful for first-time buyers or those with busy lives.
