Hiring a Mortgage Broker. Is is a good idea?
When you buy a home you will most likely call a professional real estate agent. But calling them won’t just get you the home, you also need to afford it. If you lack the funds, you can always take a mortgage, which can be done on your own or you can request the help of a mortgage broker.
When you call a mortgage broker, you become free of the burden of searching for a good mortgage. They are going to do that for you, and they will probably manage to get a better interest rate and terms than you can.
What is exactly a Mortgage Broker?
A mortgage broker is a middleman between you and the lander who will search on your behalf a mortgage that suits you best. They will go around from lander to lander to negotiate and see what they have to offer so you don’t waste your time doing it. Often enough, apart from the saved time they will also save you money.
How Does a Mortgage Broker Work More Precisely?
When you hire a mortgage broker, they will find the best mortgage rate and terms on your behalf. You will have to give them access to a bunch of important documents such as: a letter from your employer, a credit report, an income statement, and a list of assets that you currently have. This paperwork will allow the mortgage broker to determine what you can afford in a mortgage, and what type of rate you can qualify for. After carefully analyzing your documents, your mortgage broker will be able to tell you exactly what mortgage will work best for you.
Guesswork is a Thing of The Past With Mortgage Brokers
Making a mortgage application can be difficult and time consuming. This is why a mortgage broker will help you take care of it while also explaining the mortgage terms. Not only that, but your mortgage broker will check different landers, but you will need to make a single mortgage application.
When your paperwork is complete, your mortgage broker will look around to see which lander gives you the best rate and term. One main advantage is that your mortgage broker already is in touch with a variety of landers and banks.
Specific loan officers and retail banks will only offer you loan programs from their affiliate bank. Because of this, you won’t be able to find all the available options as easy as you could. You can do that by applying for a mortgage to a large number of banks. A mortgage broker will help you with that by approaching them at the same time on your behalf.
Also, your mortgage broker will search for a interest rate which is customized for you. If you can’t afford more than a 5% down payment with a 30 year fixed-rate mortgage, your mortgage broker will only approach landers who offer what you need.
Is a Mortgage Broker Expensive?
Seeing how they work independently, they need to be licensed and need to be paid for their services. Their payment usually comes from you, or your lander. Most of the times, the mortgage broker fees will be paid by the lander who offered you that loan. The fee is a small percentage of the loan amount, around 1% to 2%. If you will need to pay the mortgage broker, you can either pay him upfront, or the fee will be included into the loan installments. Because of this, you should be aware of any fee that you may pay, and discuss it with you lander in detail.
The Dodd-Frank Act was implemented not too long ago to regulate the pay of a mortgage broker, and how these fees have to be known by the borrowers. Because of this act, the mortgage brokers cannot charge any hidden fees, or add their payment into your interest rate. They also are not allowed to be permitted if they direct you towards an affiliated business, nor can they collect money both from you and the lander. If they are not paid upfront, a mortgage broker will not be paid until the deal is completed successfully.
The overall fees can vary. They depend on the size of the loan and the details involved, and because of this it is important to ask all the needed questions beforehan