If you’re going through the homebuying and a loan approval process, you will definitely want to know what a mortgage broker does and how they can help you throughout the whole ordeal. Here are all the details that will help you understand their role and why you should consider having this kind of support.
A mortgage broker is an intermediary between lenders and borrowers who helps borrowers find the best mortgage conditions for the real estate they want to buy. Brokers also manage the paperwork for underwriting and approval purposes, which makes the whole loan application process significantly easier for the borrower.
What Does a Mortgage Broker Do?
Mortgage brokers will not only answer all the frequently asked questions about mortgages you have but also help you go through the whole loan application process more easily. They are an intermediary that matches borrowers and lenders and finds the best possible conditions and low-interest rates for the borrower (either a business or an individual) by negotiating with the lender on the clients’ behalf.
A Broker Will Guide You Through the Loan Application Process
Whether the client is about to buy a new home or refinance, a broker’s role is to acquire all options available from different lenders and qualify the borrower for a mortgage. On top of that, they will deal with all the paperwork that will prove that the borrower is able to secure the finances needed to cover the amount of the approved loan in monthly installments. So be prepared to provide the following documentation:
- Proof of income,
- Proof of assets,
- Employment documentation,
- Credit report (remember, you need at least 6 years of credit history for a mortgage).
However, it is important to know that a mortgage broker is not a lender. They are there to guide the borrower through the whole process and help them find the best possible solution when it comes to mortgages.
The Mortgage Broker Defines the Appropriate Loan Amount and Type
So, once the clients present the broker with all the information and their financial situation, the broker will define what amount and type of loan is a perfect fit for this client. After all the details are set, the mortgage broker will send the request to a lender and wait for the approval. Meanwhile, they will be communicating both with the borrower and the lender, until the transaction is done, and the mortgage amount is sent to the borrower’s account.
What Are the Advantages and Disadvantages of Using a Professional’s Services?
Having a professional by your side during the application process will definitely save you from many nerve-racking situations. Here are some advantages of using a mortgage broker’s services:
- Many lenders work exclusively with brokers, which gives borrowers a much wider choice of deals and loans that would typically not be available for them.
- Brokers can negotiate better conditions for the borrowers and waive application, appraisal, and other fees.
- The broker will complete the application form.
- An experienced professional can keep you away from lenders with onerous payment conditions or high interest rates and save you from any inconveniences.
However, there are also certain disadvantages of using a broker’s assistance, like:
- Choosing a highly competitive broker who wants to close deals quickly and doesn’t pay enough attention to your case could cost you a lot of money. It means you’re at risk of not getting the best possible deal.
- Some brokers might favor specific lenders and not consider other ones that might offer you better deals.
- Some lenders simply don’t cooperate with brokers but still offer good deals to borrowers.
How Much Does This Service Cost and Who Pays for It?
Using the services of licensed brokers is definitely one of the best ways to get the best deal and is worth every cent. The commission rate that brokers receive usually ranges from 1% to 2% of the total loaned amount and is paid after the loan has been closed. But here comes the next big question – do you pay a mortgage broker?
The answer to the previous question depends on the agreement you make with the broker. The commission can be paid by the borrower, the lender, or both. So make sure to check these details before you sign an agreement.
How to Know You’re Dealing With a Reliable Professional?
Choosing the right professional financial advisor and broker will also take some time. Don’t forget to check their website, licenses, and reviews. Also, do not neglect the power of referrals from family and friends since those could be the best possible proof that a professional is reliable and will do in their power everything to find you the best deal.
A Reliable Broker Can Be Your Greatest Support During the Home Buying Process
The home buying process is everything but simple. There are hundreds of details to be dealt with, and getting a loan and mortgage approval is doubtlessly the most complex and time-consuming one. That’s why having a trustworthy professional by your side to guide you through the whole process and help you find the best option is something that could make the whole experience considerably easier.