You may have heard the age-old question – should I work with a mortgage broker? A mortgage broker acts as a middleman between you and potential lenders. Their job is to work on your behalf with several different lenders (banks or standalone lenders) to find the mortgage loan that works best for you and your family as well as your financial situation. A well-established mortgage broker will have a long contact list of possible lenders for you to work with, which makes things easier than you finding and contacting each lender on your own. Mortgage brokers are also licensed and regulated professionals who have been specially trained to do their job.
Here are some things that you can expect from your mortgage broker.
Help to get Pre-Approved
One of the first things you must do in the homebuying process is to get pre-approved. Your mortgage broker should be able to help you do this. A pre-approval is an offer from a lender indicating the type and amount of loan you could qualify for, and it’s based on an evaluation of your financial situation. It is not a promise, and more like a quote. You will have to submit a few pieces of information about yourself, and your broker will tell you what information is needed so that the process is as quick and simple as possible. In the past, getting pre-approved took time, but these days, you can get your results instantly through an online calculator. Your broker will also ask for a letter of pre-approval on your behalf, to act as proof that you were pre-approved for a certain amount.
A Streamlined Application Process
Without a mortgage broker, you would have to send a separate application to each and every mortgage lender you wanted to get a quote from. With a mortgage broker, you will only have to fill out one application – after that, they will do the hard work for you. You won’t have to worry about sifting through multiple piles of paperwork just to see if a certain lender is the right fit for your financial situation. In fact, while the mortgage application process is notorious for being long and tedious, having a mortgage broker help you to fill out the application will make things faster and easier. If you aren’t sure what to list in a certain area of the application, your broker will help give you some ideas.
Assistance for Special Cases
Does your financial situation mean that you will need some extra help getting a mortgage loan? If you have bad credit, work for yourself, are a first time home buyer, or a homebuyer with a previous bankruptcy or foreclosure, that’s you. Working with a mortgage broker will make getting a house much easier to accomplish. Most mortgage brokers are trained to work with folks who need some extra assistance and know which mortgage lenders will work with them and offer them good deals. There are also mortgage products on the market specifically for people who are in unique situations, and your mortgage broker will know where to find the product that you need. Buying a home doesn’t have to be a pipe dream when you have a knowledgeable and experienced mortgage broker on your side.
General Process Simplification
There are a lot of factors involved with getting a mortgage, and your mortgage broker is knowledgeable enough to help explain things when they get confusing. If you have questions, ask them! No matter how many inquiries you can come up with, you have the right to be fully knowledgeable regarding what is likely to be the biggest purchase of your life. Your broker spent a long time becoming a mortgage expert, so use their knowledge to your benefit and make sure that you ask them anything you can. To make sure that you are signing up to work with a broker who has the knowledge you will certainly be seeking, ask them about their experience in your initial interview with them. You want to work with a mortgage broker with at least three years of experience, if not more.
If one lender is offering more money but a higher interest rate, should you take that loan instead of the smaller loan with a better interest rate? Your mortgage broker can help you figure this out. They have a lot of experience matching financial situations to mortgage loan products. If the options presented to you seem equally beneficial, you can be sure that you’ll have help figuring out which one is the best for you and your financial situation. You can also be sure that your application will be checked against many more lending institutions than if you were doing the applying on your own behalf – your mortgage broker likely has a large contact list of many different mortgage companies who can all offer different rates, which they will then compare and offer you a shortlist of your best options. All the hard work is done for you when you have a mortgage broker!
Negotiations on Your Behalf
Don’t feel comfortable telling your mortgage lender that you want a better deal? Your mortgage broker can do this for you. Save yourself the time of trying to fight for a better deal – when your mortgage broker is on your side, you’ll know that you are getting the best offer because your broker fought hard for it. Of course, it’s good to ask your broker to do this instead of just assuming that they are willing to do so and will automatically do it – but there should be no issue and your broker should be happy to help with rate negotiations. You can tell your broker your absolute maximum you are able or willing to accept as a mortgage rate and ask them to fight for that number or better. They must know your expectations in order to know what to negotiate for, so be sure you let them know when you ask them to negotiate for you in the first place.
Specialties – Maybe!
Some mortgage brokers have specialties – for example, one broker may be highly experienced in working with people who have bad credit, and another broker may have a lot of experience helping first time buyers. It depends on the broker you are talking to. To find a broker who specializes in your specific situation, ask around. You may also have some success asking any other mortgage professional you know if they have any connections with mortgage brokers who could help you. While you may enjoy working with a broker that specializes in your specific financial situation, your arrangement with a regular broker with no specialties is likely to be just as rewarding and enjoyable. You will just have a slightly quicker time if you go with someone who has experienced your type of customer a hundred times!
Guidance from Beginning to End
Which comes first – putting in an offer on a house you like or sending in your mortgage loan application to the lender you chose? What about touring a house or getting pre-approved for a mortgage loan? Not everyone knows the proper order of the steps you must take to get a new home, but your mortgage broker does. From beginning to end, they are there to help you and guide you to what your next steps should reasonably be. The mortgage process is ever so slightly different for everyone, but there is always a general framework that should be followed as far as specific “steps” goes. Your broker will be able to give you a run-down of what to expect and should frequently let you know what your next steps are and how you will achieve them.
Someone on Your Side
It can seem like you are “against” the seller, who is trying to get more money from you, as well as the lender, who is trying to charge you a higher interest rate than you’d like. However, your mortgage broker is on your side and no one else’s. Mortgage brokers cannot be rewarded by any specific bank or lender to push their products, and they are not paid based on the amount of a loan you get approved for. The only thing they want is to get you in your new home expeditiously.
Help Getting a Rate Lock
Once you commit to a specific lender, you can ask your mortgage broker for help getting a rate lock. A rate lock ensures that you will receive the same interest rate you are quoted for a set timeframe, regardless if rates go up or down. Typically these rate locks last for 30 to 60 days. Your mortgage broker can also help you obtain a float down clause – this ensures that if interest rates fall during your rate lock period, your rate will fall to match. You can also have your broker get a loan commitment letter from your lender, which is your rate lock agreement in formal writing. It should have the lender’s name, the interest rate and points, the date the rate was locked, and when the lock expires.