When you are thinking of buying a house, hiring a mortgage broker can help you with the process. They can relieve you of the unwanted stress and loan-related questions that would have been difficult for you to deal on your own.
A mortgage broker is a middleman between borrowers and lenders that helps you find the lender who can meet your needs, such as a low rate of interest and down payment.
A right mortgage broker has a vast network of lenders that deals in different properties or the ones that are flexible with credit scores. Choosing a mortgage broker has advantages over going directly to a lender for a mortgage since they can make you save a lot of money in the mortgage process, obtain more loan options and check out various properties within a fair deal.
The mortgage industry is constantly changing; therefore, another benefit of hiring a mortgage broker is that he can make you understand the lengthy process from getting a better rate of interest to paying lower fees and closing the loan on time.
Here are some things that you must know about a mortgage broker-
1) How does a mortgage broker get paid?
Mortgage brokers are paid by lenders or borrowers but never by both. If you choose to pay the broker by yourself, then it is called Borrower-paid compensation rate, and if the lender pays them, then it is known as Lender-paid compensation rate. The lenders pay brokers from 0.5% to 3% of the loan amount.
Whenever you find the need to hire a mortgage broker, you can choose to ask him what’s his lender-paid compensation rate or borrower-paid compensation rate. They could be same in most cases.
2) How are mortgage brokers different from loan officers?
Loan officers work under lenders and are paid a set salary with bonuses for writing loans for the lenders. In contrast, mortgage brokers work independently or within a firm to deal with different lenders and earn their money from lender-paid fees.
3) Is a mortgage broker right for you?
Mortgage brokers can relieve you from finding the best home and get done with the formalities that come with it. They can apply for loans with different lenders and negotiate a better deal for you.
You must be familiar with the fact that it takes hours to apply for different loans and going through the whole process of underwriting the loan, showing the statements and credit scores and ensuring the transaction stays on track.
Just go on comparing the offers you get when you take help from a mortgage broker or contact a lender directly.
4) How do you choose a mortgage broker?
You can do online research and check for reviews or contact the previous customers—the other thing to ask your friends and relatives who have once hired a broker for themselves.
Another referral source would be your real estate agent who can provide you with the list of names of a few brokers that he trusts.