Chances are if you’re looking to buy a home you will need financing options. Today’s homebuyers have more options than ever before to obtain that financing. It’s an exciting time to shop for a home.
For instance, you might choose to work with your local bank or credit union, or you could go with a big, national bank. A mortgage lender might be something to consider, too. However, for many consumers, working with a mortgage broker is the right choice.
Of course, finding the right mortgage broker is important, and if you’ve never worked with one, a little guidance may be needed. In this guide, we will explore what aspiring homeowners should know when comparing mortgage brokers.
What Is a Mortgage Broker?
First, let’s recap – what is a mortgage broker? Essentially, brokers are specialists who help homebuyers navigate the often-convoluted world of mortgage financing. They’re not banks, and they’re not mortgage lenders. In fact, brokers don’t underwrite loans at all. They work for buyers, sorting through loan options, packages, terms, and more to find the financial products that fit their needs, goals, and budget best.
How Do Mortgage Brokers Get Paid?
Lenders earn money through closing costs and interest on a mortgage and lenders often pay the mortgage broker as well. Simply put, mortgage brokers are paid by lenders for their services, although they do not work for the lender. Instead, they work for the borrower.
Who Benefits from Working with a Mortgage Broker?
Mortgage Brokers can offer more options because they do not work for a single bank. A good mortgage broker will ask you pre-qualifying questions to understand your whole financial situation. From there, the broker will go through their often thousands of loan programs and match you with the one that fits your needs best!
Why would I work with a Mortgage Broker when I can work with a direct lender?
There are several important reasons that homebuyers choose to go this route, including the following:
- You want to shop around for the ideal loan and interest rate
- Your income sources are complicated
- You want to compare specialty loans unavailable through banks and mortgage lenders
- You don’t have perfect credit
- Your credit history is complex
- You want to work with a local broker
How Do I Choose a Mortgage Broker?
There are many ways to choose a mortgage broker. For instance, if a family member or close friend has worked with one, you might ask for recommendations. However, many of us don’t have access to those sources of information. In that case, many people often rely on realtors or google and find a broker in their area.
Once you have built a list of potential brokerages, it is time to take things to the next step. You’ll need to use the Nationwide Multistate Licensing System and Registry (NMLS) to make sure that the brokers you’re thinking about working with are fully licensed. The registry can also give you access to additional information that should be used in your decision-making process, including self-disciplinary actions.
To delve deeper into each broker’s reputation and capabilities, you may also want to research them through the Better Business Bureau, as well as checking any relevant Google or Yelp reviews. This information can give you an idea of what other customers are saying about their experience, common problems reported when working with the broker, and more.
Finally, you’ll need to interview the strongest contenders. To help streamline this process, we’ve included some of the more important questions to ask:
- How does your application process work? Look for information about the average time to closing, specific requirements such as credit scores or down payments, documentation that you will need, and any third-party fees that might be assessed.
- How much experience do you and your team have? You want to make sure that the broker has experience handling situations like your own. You also want references as to their history, who is on their team, and how they prefer to communicate.
- What rate can I get? Don’t ask about the current interest rate. Instead, ask what rate you are likely to get. Be as specific as possible, including your credit score and the amount and type of mortgage you’re interested in obtaining.
- Which lenders do you work with? Get an idea of which lenders the broker regularly works with, but make sure to ask about specific lenders you have in mind, or about particular financial products you want to explore.
- Who pays your fees? While many brokers are paid by the bank, some charge the borrower. Know what you’re getting into.
Get In Touch
With the right broker, you have a wealth of mortgage options open to you. If you have any questions you can reach us at 800-725-6450 or send us an EMAIL HERE.
If you are ready to explore your options and make the leap into homeownership you can get a FREE RATE QUOTE!