Searching for a mortgage can be one of the most difficult steps in buying your new home. A mortgage broker can make the process easy by connecting homebuyers with appropriate loans, preparing application materials and guiding the borrower through underwriting and closing.
You’ve probably heard the term “mortgage broker” from your real estate agent or friends who’ve bought a home. But what exactly is a mortgage broker and what does one do that’s different from, say, a loan officer at a bank?
A mortgage broker is a licensed and regulated financial professional who acts as an intermediary between borrowers and lenders. Brokers identify loans that meet borrower needs and then compare rates and terms so the homebuyer doesn’t have to. Mortgage brokers have the ability to offer mortgage products from a network of lenders and provide access to a greater range of products than loan officers, who are limited to their own bank’s offerings.
Mortgage brokers then guide clients through the application and underwriting processes, often by compiling application materials, pulling the borrower’s credit history and verifying income and employment information. Finally, mortgage brokers work with everyone involved in the transaction, including the real estate agent, underwriter and closing agent, to ensure the loan closes on time.
Here’s some great reasons to use a broker
1. PRESENTS ACCESS TO HUNDREDS OF LOAN OPTIONS
A mortgage broker offers a wide range of mortgage loans from a number of different lenders. The greater the broker’s experience and network, the better your opportunity to obtain the loan product and the interest rate that best suits your needs.
2. FINDS THE MOST FAVORABLE OFFER
A mortgage broker represents your interests rather than the interests of a lending institution. They should act not only as your agent, but as a knowledgeable consultant and problem solver. With access to a wide range of mortgage products, a broker is able to offer you the greatest value in terms of interest rate, repayment amounts, and loan products. Mortgage brokers will interview you to identify your needs and your short and long term goals. Many situations demand more than the simple use of a 30 year, 15 year, or adjustable rate mortgage (ARM), so innovative mortgage strategies and sophisticated solutions are the advantage of working with an experienced mortgage broker.
3. HAS FLEXIBILITY & SKILLS TO MEET YOUR NEEDS
A mortgage broker navigates the client through any situation, handling the process and smoothing any bumps in the road along the way. For example, if borrowers have credit issues, the broker will know which lenders offer the best products to meet their needs. Borrowers who find they need larger loans than their bank will approve also benefit from a broker’s knowledge and ability to successfully obtain financing.4.
4. SAVES YOU BIG AMOUNT OF TIME
With a mortgage broker, you only need one application, rather than completing forms for each individual lender. Your mortgage broker can provide a formal comparison of any loans recommended, guiding you to the information that accurately portrays cost differences, with current rates, points, and closing costs for each loan reflected.5.
5. SAVES YOU MONEY WITH NO HIDDEN COSTS
A mortgage broker is offered loans on a wholesale basis from lenders, and therefore can offer the best rates available in the market, typically making the total loan cost lower for the client. A reputable mortgage broker will disclose how they are paid for their services, as well as detail the total costs for the loan.6.
6. DELIVERS PERSONALIZED SERVICE
Personalized service is the differentiating factor when selecting a mortgage broker. You should expect your mortgage broker to help smooth the way, be available to you, and advise you throughout the closing process. Check the qualifications and experience of the mortgage broker, ask for references, and rely on referrals from your attorney, accountant, real estate agent, or financial planner.
Why not just go to a bank?
Firstly, it’s hard for most people to choose. Which bank? Which product? There are a lot of options out there, and with the Reserve Bank moving official interest rates and banks moving them independently, it’s an ever-changing market.
With choice comes complexity. It can get tricky to navigate through it all. And it can take a lot of your time. A mortgage broker will steer you through this to find the loan that suits your needs and not the need of just one particular bank. A broker then deals with the lender and manages your application process through to approval.
That’s why a broker makes sense. They do this day in and day out. They know the lenders and their products, and they’re up-to-date with any changes when it comes to lender policies and products. Brokers help you choose what’s right for you.
Whatever type of loan you’re looking for, or whatever part of the loan process you’re at, a broker can help.
It doesn’t matter if you’ve just started thinking about buying, have already found the perfect house and want to quickly sort out your finance, are looking to unlock the equity in your current property, or are wanting to find out if there’s a better borrowing option than the one you currently have – any time is a good time to explore your options.
Once you and the broker agree on the right loan, they take care of the application and get everything in place for the approval process, then see it through to settlement.