What do you understand by a Mortgage Broker?
A mortgage broker is a link between mortgage borrowers and mortgage lenders, brings them together but do not use any of their funds to get mortgages. A mortgage broker links a borrower with a lender who is the best fit to handle the borrower’s financial situation and also its interest rate.
A broker passes paperwork from a borrower to a mortgage lender for some purposes like underwriting, approval, etc. You should not confuse a mortgage broker to a mortgage banker, who can close and funds with his own funds a mortgage.
How Mortgage Brokers Work
A mortgage broker is a link or intermediary to borrowers and lenders. If a borrower is purchasing a new home or refinancing, a mortgage broker get loans from a lender for the borrower to consider.
The broker can also get together things like asset, income, a credit report, documentation, and employment and he can also get other details for accessing the ability of the borrower in other to secure financing.
The broker can determine for the borrower a loan amount, the borrower loan type, loan to value ratio, and then send for approval the loan to the lender. During the entire transaction, the broker will communicate with both the lender and the borrower.
Advantages of a Mortage Broker
Below are the advantages of a Mortage broker.
A Broker May Save You Legwork
A mortgage broker has contact with different lenders, some you might not have heard about. A broker can save you from some onerous payment of some lenders hidden in their contracts.
A Broker May Have Better Access
Some broker works constantly with some lenders and they rely on their services to help their clients. To get to some retail mortgage, you may not be able to get directly to the lender.
Mortgage brokers can help you get to special rates from lenders due to their close in the business, you can get a lower price than you can get on your own.
A Broker May Manage Your Money.
To work with a new lender, there may be several attached different types of fees in taking a new mortgage.
This includes appraisal fees, origination fees, and even application fees. In some cases, some of these fees can be waved out by connection the mortgage broker has with the lender which can save some money.
Sometimes a broker interest may not be the same as yours
You have an aim to get a mortgage that will come with an affordable interest rate and even with low fees.
On the other hand, a mortgage broker often gets a percentage from the lender for bringing a borrower in for a business.
This fee can be from the percentage of the amount o the mortgage and will be different amongst lenders. Therefore, a broker’s goal is to get you into a mortgage that will be more favorable to them.
They May not get the best deal
The thought of many home buyers or borrowers is that a mortgage broker will get them a better deal than they will on their own. Sometimes it does not always come in that way.
Meanwhile, some lenders will offer borrowers or home buyers the same deal they will make with a mortgage broker. It is not bad to shop on your home sometimes, this is to know if you are getting the best deal from your mortgage broker.
You May owe a broker fee
Mortgage brokers get paid either through you or through the lender. If the lender covers the fee, you have to be more concerned if that will make your loan more expensive due to the commission to the broker.
Meanwhile, if you are paying the fee, you need to figure out if it is into the mortgage costs before you conclude if the deal you are getting is good or not.