When you are buying your first home, you may be unfamiliar with the many options for securing funding.
Taking out a mortgage can be a huge undertaking. You must find lending companies, organise paperwork, and come up with a down payment.
After spending several days or weeks researching lenders, you may decide that hiring a mortgage broker is in your best interest.
Many people are hesitant to hire one mainly because they do not understand exactly what they do and how they get paid. The process of using a broker is much simpler than most people think.
Payment
You may be concerned about large fees when using a mortgage broker. Their payment, in some cases, does not even come from the client.
There are laws in place that keep them from adding extra fees and from charging too much, as well. They usually receive about 1-2 percent of the total amount borrowed. The amount must be disclosed upfront and may come from either the lender or the borrower.
If the borrower is meant to pay the fees, it is often added into the loan to be paid over time. This amount, however, does not interfere with the mortgage interest rate. Lender often pay them for bringing in business.
Role
An independent mortgage broker is not a lender. They work as a liaison between you and several lenders. A broker helps you get your financial documents in order so that you are more likely to qualify for a loan, as well.
They choose lenders that are likely to work with your credit history, income, and current debt. When you are ready to take out a mortgage, you only deal with the broker throughout the entire process.
When you apply for loans on you own, you may be communicating with several lenders at the same time.
The Difference
There are several differences that occur when you are working with a broker. You can often achieve approval for a loan much sooner than when you attempt the process on your own.
A broker usually has more knowledge about the lending habits of various banks than individuals do. You are likely to end up with a much better interest rate. Your monthly payments may also be negotiated to fit better within your budget.
When you find your dream home and need to get approval quickly, a broker is your best option. Otherwise, you may find yourself applying individually to many lenders with no positive results.
The process can take weeks, and sometimes months, when you do not have someone to help you find the right match.
A mortgage broker is not as mysterious as it sounds. Their role is straightforward, and their help can save you time and money. Your loan may also be approved much faster.
A broker knows which banks are more likely to approve you. They can look over your paperwork and narrow down your options. They also look out for your best interest by trying to get the best interest rates.
Payment is often a main concern yet is simple. Your broker should explain payment expectations during your first consultation. This may be your responsibility or that of the lender. Speak with a broker to see how they can help you get started on the road to home ownership.
