Finding the right home mortgage deal might be challenging, especially if you’re a first-time home buyer. If you’re planning to take out a loan for your home purchase, a mortgage broker may be able to help you out.
With their expertise and wide access to the lending market, mortgage brokers may help you save time and costs in finding the best terms and rates for home loans. In some cases, they may even prove helpful in reducing the cost of fees and other charges imposed by the bank or a lending agency.
However, there are limits to what mortgage brokers can do, and some lenders choose not to work with them, especially those who’ve had broker-endorsed buyers default on their loan payment.
Let’s discuss some tips in finding the right mortgage broker, and take a closer look at what mortgage brokers do, and the reasons home buyers may want to hire one.
What Is a Mortgage Broker?
Similar to a real estate agent, a mortgage broker is a middle person who links mortgage borrowers with lending agencies such as banks, and finds the best mortgage rates for the former. Most mortgage brokers work with a number of lending companies, and they’re typically not employed by a lender on a full-time basis.
For this reason, a mortgage broker typically has access to and knowledge of various lending products and services. It’s imperative that brokers have a wide reach, being that the main responsibility of the broker is to match a borrower with an ideal home loan product that works best for each situation and capacity.
That being said, a broker will assess and study a prospective borrower’s financial status, mainly his or her capacity to pay. This means a thorough investigation of your income and liabilities or expenditures, as well as your current credit score.
A broker can also apply for loans on a borrower’s behalf and negotiate to lower certain charges, including application and appraisal fees.
Why You Might Need a Mortgage Broker
You can proceed and file a mortgage application without a broker. However, if you’re in a not so favorable financial situation, consider hiring one or applying for a Federal Housing Authority (FHA) mortgage loan.
Generally, you might need the help of a mortgage broker if:
- you want access to all the lending products
- you have a low credit score
- you have your own business
- you’ve done your homework yet can’t seem to find a good fit
- you want help in getting the best deal
Here are some tips in finding the mortgage broker who can help you snag the home of your dreams:
1. Check Qualifications and Experience
Qualifications vary from state to state. Nonetheless, your mortgage broker should have a credit license and the minimum education, as well as training certificates to practice his or her profession.
The National Association of Mortgage Brokers (NAMB) in the US has certification exams to ensure the competencies of its members. The three levels of competencies under this accredited group include: General Mortgage Associate, Certified Residential Mortgage Specialist, and Certified Mortgage Consultant.
In its neighboring country of Canada, provinces have different licensing and registration requirements, and the first step of brokering is to take broker course that’s unique to each area. A mortgage broker has the option to become an accredited mortgage professional or to gain more experience and some education to take his or her career further. According to the website, In Australia, for example, you need to have an ASIC license to provide advice to clients as a mortgage or finance broker.
Visit sites like certifiedmortgagebroker.com to find professional and qualified brokers in Mississauga, Ontario, Canada.
Ask your broker, too, if she or he has ample brokering experience. Then, request for the contact details of references who can vouch for the broker’s services.
2. Reach Out to Previous Client(s)
Observe your broker’s reaction when you ask this question. If he or she can’t provide any names and contact details, run for the hills as this person may not be an authorized or licensed professional.
Alternatively, if the broker is confident and happy to provide you with the details, this person may likely be an accredited practitioner who’s had experience working with satisfied customers.
Once you have the names and contact numbers, phone or visit the broker’s former client and discuss his or her overall experience working with the broker. Also, ask questions about how the transaction turned out and how much fees were paid.
3. Choose a Broker Who Can Give You the Widest Access to Mortgage Offers
Before getting on with it, ask your broker if he or she works with a wide range of lenders. Also called whole-of-market brokers, these professionals will offer and discuss with you all the available mortgage deals on the market. From there, they’ll pick out the best and cheapest deal based on your situation and capacity.
Some brokers only work with a few lenders, as the latter prefer to employ in-house loan representatives to avoid brokers from providing false information just to get their client approved. If your chosen broker doesn’t have extensive access to the market, it might be better to do mortgage deal shopping on your own.
4. Ask Your Broker Questions and Gauge Their Answers
Don’t hesitate to ask difficult questions to your broker. Ask about your chances of getting a mortgage approval and expect an honest answer. For instance, after sharing your financial difficulties such as unstable income or low credit scores, your broker should be discussing how these may lower your chances of qualifying a mortgage but presenting other options, as well.
You don’t want to work with a broker who’s only good at raising expectations.
Consider asking about direct-only mortgages or home loans offered by lenders to direct borrowers or those who opt not to hire mortgage brokers. Although brokers are not obliged to inform interested borrowers of this deal for obvious reasons, try to ask your broker about this to gauge his or her willingness to match you with the best possible deals.
5. Your Broker Should Be Able to Explain All Your Options
Additionally, a professional mortgage broker should be able to discuss with you some worthwhile options, along with justifications on why these types of mortgage products merit your consideration.
Ask questions about full loan packages and repayment schemes in both short- and long-terms. Be wary of low monthly rates as there may be hidden charges or a drastic increase in payments after a few years. Don’t sign any document with your broker unless you’ve had a complete information about each product being offered.
Don’t forget to ask for a printed copy of your credit assessment to see whether your broker was able to get the information he or she gathered from your discussion. Also ask for copies of any document from lending companies to check whether your broker was able to provide you with the correct and updated information.
Choosing the right mortgage broker is crucial in getting a home loan. With their help, you’ll be able to save a great deal of time and cost. Although you need to pay for a broker’s fee, the total amount of time and money saved in finding the best deal may well be worth it.