It can be difficult to shop around for a mortgage. You want to get the best rate possible and a loan that suits your needs. A mortgage broker is a great way to get the best home loan.
A broker can help you make the most of your mortgage programs. A mortgage broker can help you every step of your way and not just with one lender.
What does a mortgage broker do?
A mortgage broker is licensed to act as an intermediary between you and your lender. When working with a mortgage broker, you’ll have access to a variety of home loan programs from different lenders. The broker does not actually make loans. The broker works with a range of lenders.
In general, a mortgage broker will have a lot of knowledge of different home loan programs, and a good idea of what you might qualify for, including what mortgage rates you’re eligible for.
Do not confuse a mortgage broker with a loan officer. However, mortgage brokers are not limited to one lender.
Once you have decided on a loan program, the mortgage broker manages the process, from mortgage pre-approval to closing, by coordinating the efforts of the lender, real estate professional, and title company. This is a great help, as the home buying process can often be difficult.
What are the fees for brokers? Your broker cannot be paid by both you and the lender. Dodd-Frank also limits the broker’s cut at 3% of the loan amount in points or fees.
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Why would you choose a broker to represent your mortgage lender over a lender?
A mortgage broker can help you access many different home loan programs quickly. A mortgage broker will take care of all the legwork involved in researching different home loan options.
Pros
- Potential for better access: Many mortgage brokers have regular lenders they work with, and might be able to get you the best mortgage rate. Some brokers also have connections with lenders and banks that you might not be able to borrow from.
- It saves time: A mortgage broker is knowledgeable about various programs. This means that you can likely save time and effort by having them do the research, handle paperwork, and negotiate. This can also reduce the time it takes to buy a home.
- Could save you money on fees. It all depends on the broker and lenders. A broker might be able get the lender waived some fees.
Cons
- Different interests may not be aligned: A mortgage broker may be able to point you in the right direction, but they may not be motivated to get you the best deal. Your interests and those of the broker may not always align depending on the arrangement made with the lender. Credible puts you in complete control. Any of our partners lenders can provide any loan that you need. There is no incentive for us to direct you towards one lender. It’s up to you.
- Estimates may not be guaranteed When working with a broker to obtain a mortgage, you might get a “good faith estimate.” This estimate is only an estimate of the final terms. You might later find out that the lender charges a higher rate, or other fees. Credible is transparent and there are no surprises. The initial Loan Estimate is sent by our partner lenders. This means that the rates and fees you see in the disclosures should match.
- Not all Lenders work with brokers. Not all lenders work with every broker. Although you may have more options through a broker than you do with the lender, you might not be able to see all of the possibilities.
Tip It doesn’t matter if you work with an individual lender, or with a broker. You need to be aware of fees. These are normal home buying costs, but that doesn’t mean you have to pay a lot. Brokers and lenders can negotiate fees. Broker fees are not paid by clients. This usually means that the broker is being paid by the lender. You need to ensure that the broker doesn’t steer you toward something that will be of greater benefit to you.
Credible is one of the online brokers. They make it simple to compare multiple loans and choose the right loan for you. We provide transparency about the rates and fees, unlike other brokers who might hide fees or make it difficult for you to compare rates.
Credible makes it easy to compare prequalified rates for all our partners lenders.
How to locate a mortgage broker
Here are some steps to take if you want to find a mortgage broker who can help you get the best home loan deal.
Ask for referrals: Talk to people in your network about home loan transactions. Ask the broker for referrals.
Ask how they are paid.Ask whether the broker is paid by lenders or if the borrower has to pay a fee. Find out how much different lenders compensate them, and how they handle mortgage closing costs.
Ask who they work with: Get an idea of the top lenders they work with and what programs they have.
Find out more about the process. Get information about how the mortgage broker works with clients. This includes the frequency they respond to messages, and what you can expect from working with them.
Check their license Mortgage brokers can be licensed financial professionals. You should check with your state’s financial licensing department to see if they are up-to-date.
Check with online mortgage brokers. Rather than being steered in a specific direction, an online broker like Credible, can provide you with a list of eligible loans, and you can easily compare your mortgage options and choose what works best for you.