A Mortgage Broker Can Pay Off for You
Maybe you're buying your first home or maybe you're just considering upgrade residences. Either way, you're going to need a mortgage to pay for your new home. Should you apply at the bank for a loan or should you take advantage of a mortgage broker's services? The decision really depends on a variety of factors, but most important is your personal preference and needs.
How do mortgage brokers differ from loan officers?
As an employee of a bank or lending company, a bank loan officer processes loans and mortgages for his or her employer. The main difference between loan officers and mortgage brokers is that mortgage brokers are not employees of a particular lending company; they are independent or freelance agents.
Mortgage brokers can work with just a few or even hundreds of lending companies whereas a bank loan officer is an employee of one particular bank. Though a bank officer may be able to offer a few different types of mortgages, they all originate from just one place whereas a mortgage broker works with tens or even hundreds of companies. It is a mortgage broker's job to bring together borrowers and lenders – for a fee, of course. A mortgage broker is essentially a go-between. They do not lend you the money; they find the people who will lend you money for your new home.
Mortgage brokers do a lot more of the research for you. They evaluate you as a homebuyer, and taking into account your credit standing, they decide which lender will best suit your needs. A mortgage broker submits the loan application on your behalf and works with you until it goes through. You can do this research yourself if you have time, but a mortgage broker has a working relationship already established with many of these lending companies and that may result in a better deal for you. Mortgage brokers secure loans through many types of investors including investment banks, savings and loans and even private sources.
Most of the mortgages you may have seen on the Internet are put there by mortgage brokers. Many in-person or online mortgage brokers have connections to lenders in all different parts of the country, which is something that has its own pros and cons. You may end up getting a better rate, but an out of area company may not have the necessary knowledge of property in your area or specific property features and classifications. In the longer run, this probably won't be an issue; there just might be a slight delay in processing your application until all terms and questions about the property are answered.
If you're having trouble securing a loan from a bank, a mortgage broker may be your best bet. Mortgage brokers are often able to find a lender for applications that banks refuse. So there is hope if your local bank has turned you down – you just need to expand your search for a lender to online banks or a mortgage broker.
To prepare for a meeting with a mortgage broker, you should obtain copies of your credit history. Though a mortgage broker is able to do this, it will save time and hassle if you bring these with you to the initial meeting. The mortgage broker will be able to give you a much clearer idea of the type of loan and terms he or she can secure for you if they know what your current credit situation is.
You do need to remember that mortgage brokers get paid a fee for the transaction so they are working for their own interests as well as yours. The higher a rate they get for the lending company, the more their commission will be so let them tell you what terms they can obtain rather than what you're willing to accept.
Remember that everyone's needs are different. Talk to family and friends and see whether they secured their mortgage through the bank or through a mortgage broker. Do some investigating to find the best loan terms and transaction time. Your real estate agent may also be able to make some useful suggestions or even refer you to a suitable mortgage broker.
By Diane Tuman
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