Maybe you’ve heard about hiring a mortgage broker but you are not yet convinced what they do or if you really need one. Mortgage brokers work as an intermediary between financial institutions that offer loans (like banks) and individuals looking to buy real estate and need to borrow money through a loan. A home lending advisor would recommend that you hire a mortgage broker for the following reasons.
Since you are hiring an extra person to do work, you will need to account for the costs of using a mortgage broker. They are typically compensated by both the borrower and lending institutions through commissions. Of course, the costs vary greatly but generally they earn between 1% to 3% of the total loan amount. Before working with a mortgage broker, always ask for their fee structure so you know exactly how much you will be paying.
Here are some advantages from having a mortgage broker.
They will save you time and fees.
Mortgage brokers can save you legwork because of their vast network with lenders that you might not even know about. Honest brokers will also advise you to stay away from certain lenders with payment schemes that they don’t recommend or agree with.
If you are busy with work and other priorities, making time to scout for real estate and going to banks to inquire about loans is almost impossible. Having a broker will allow you the freedom to go about your daily life as usual and only meeting them every few weeks. They will also save you the hassle of finding out what documents you need to present to the lending institutions; you just need to procure it and they will consolidate it for you.
Lenders generally trust the mortgage brokers.
Brokers that have been in the industry for a while will have a good reputation with the lending institutions they work with. You will have higher chances of being approved for a loan if you have a reputable broker approaching the lender on your behalf. Lenders will also have an idea of the kind of clients the brokers will provide them, so you will be off to a good start if you have a broker guiding you.
Brokers can provide you better access.
Unfortunately, some lending institutions work exclusively with mortgage brokers to bring them suitable clients. Some lenders are not open to direct calls or inquiries to get a retail mortgage so in cases like this, you would need a mortgage broker to do the coordinating on your behalf. But keep in mind that brokers can get special rates from lenders due to their reputation and commission from previous years, so in the long run you can save some money if you can land a good deal with low interest rates from your lender.
Overall, there are many benefits to having a mortgage broker. They will take care of the hard part which is approaching multiple lenders and finding the best potential loan that works for you. Brokers will also take care of the legal matters and work with both you and the lender in order to close the loan.