Making sure you get the best mortgage is important; after all you’re the one who has to pay it back right? But finding that home loan can be nerve wracking. There’re a lot of moving parts, like interest rates, documentation, and closing costs, which can make the process difficult. Wouldn’t it be less stressful if someone could answer the tough questions while guiding you towards a great mortgage? That’s exactly what a mortgage broker can do for you.
What is a Mortgage Broker?
A mortgage broker is your home loan advocate. Their sole purpose is to help you get the best mortgage for your situation. While a bank, or other financial institution, offers multiple products such as credit cards, checking accounts, and loans, a mortgage broker focuses all their attention on providing you with a wide variety of mortgage options, interest rates, and terms to make sure that you get a great home loan.
What are the Benefits of Working with a Mortgage Broker?
Working with a mortgage broker provides you with the following benefits:
1. More Mortgage Choices
Who doesn’t want more choices, especially when you’re making such a big decision? Mortgage brokers can help you find more choices. They shop for mortgage programs from numerous “banks” called mortgage lenders. This gives them access to a wide selection of home loan programs, designed to help you find the mortgage that you want. Banks, on the other hand, have a limited number of choices. They can only offer you a few mortgage programs, typically the generic home loans.
2. Better Interest Rates
Interest rates are a critical part of mortgages. When you’re looking at getting a 30 year mortgage, a slight change in the interest rate could cost you thousands of dollars. To help you save money, a mortgage broker compares interest rates from each of the lenders they work with. That way they can get you the best rate available. You bank can only offer you one interest rate, theirs.
3. Lower Costs
With better interest rates and more options, you’ll already save money working with a broker, but you can also avoid unnecessary fees. A lot of banks and other financial institutions charge unneeded fees that increase your expenses. A good mortgage broker can help you eliminate those fees and get a home loan that’s more affordable.
As a heads up, when you get a mortgage, watch out for any of these unnecessary fees:
Document Preparation Fee
Broker Servicing Fee
4. Home Loan Programs for Unique Situations
Everyone has a different financial situation and that’s ok, but in certain circumstances it can be a little harder to get a mortgage, like if you have bad credit. In these situations, a mortgage broker can help you with home loan programs that aren’t available at a bank or financial institution.
Self-Employed Borrowers: Owning your own business is awesome, and getting a mortgage should be just as great. Mortgage brokers are very familiar with the tax forms and documentation that comes with running your own business. They’ll help you obtain and submit the correct information that will have you approved for a mortgage in no time.
Low Credit Scores: Do you have less than perfect credit? That’s fine because brokers have home loan programs that can help you qualify for a mortgage with bad credit. A bank typically can’t help you when your scores are below 640 or 620, but mortgage brokers have loan programs for credit scores at and below 580.
Recent Housing Event: Have you been through a recent foreclosure, short sale, or bankruptcy? While banks would require you to wait years before they could help, a mortgage broker can help you much sooner. They have home loan programs that can help you find a solution soon after you've gone through an event like was mentioned above.