If you are buying a home, then you need to learn about some commonly held buyer misconceptions about mortgage brokers…
What Is a Mortgage Broker
A mortgage broker is essentially a middleman between the borrower/homeowner and the bank or mortgage lender. When you use a mortgage broker, you don’t actually work directly with the bank. They work directly with both the consumer and the bank to help borrowers qualify for a mortgage, whether it is a home purchase or a refinance.
They can “shop” numerous lenders so they can find the best mortgage based on your needs. This is a serious advantage for home buyers!
The home loan market has grown to be much more competitive than it was a few years ago. It is now common for many home buyers to use a mortgage broker to help them with the mortgage process. There are some important differences between what a mortgage broker does and what you think they do.
Here are a few things to understand about getting a mortgage when buying a home!
Your Mortgage Broker Doesn’t Approve You
Many buyers think using a mortgage broker is a guaranteed way to get a mortgage. However, many mortgage brokers are independent and not a bank employee. This means they don’t have the ability to approve your application.
On the other hand, a good broker can determine what will work best for you. They can provide you with info on the very best mortgages suitable for you. This can include setting an appropriate loan amount, loan-to-value, and determining which loan type would be ideal for the borrower. Also, a mortgage broker can make certain all of the guidelines for the application are met.
Mortgage brokers work with home buyer through the entire mortgage process. You may find that they’re more available than the loan officers at a big bank. They also tend to work with borrowers on a more personal level.
This is a big advantage over working with a big bank or an online lender. If you go with one of these lenders, you may spend most of your time waiting to get in touch a real live human. If your loan is declined with a bank or online lender, that’s the end of the line. With a mortgage broker, they will simply move on to the next bank.
A down payment normally must be money that you’ve come up with all on your own. If any of your down payment was given to you, it’s called a gift. It is crucial that you let your mortgage broker know so this will be noted as part of your paperwork. Your mortgage broker will know the exact steps and paperwork you must have when your down payment is a gift!
They Work for Commission
Some mortgage brokers are commission-based. This means that their time is critical for them. If you’re not seriously interested in purchasing a house soon, you shouldn’t waste their time.
Mortgage brokers charge fees or a commission for their services. You need to know that their fees vary. They may get paid by the lenders they connect you with or you may pay their fees out of your own pocket.
If you aren’t paying them out of your pocket, they’re getting paid by the lender. This can mean you are paying a higher rate.
Despite being paid by commission, most experienced and reputable mortgage brokers want repeat or referral business. This means they try to charge a fair amount while providing the best service.
Make sure you consider all your options so you get the best combination of rate and fees. You may find that despite being paid by commission, a mortgage broker can get you the best deal on a mortgage.
I suggest doing some research on your own before contacting a mortgage broker. You could ask them if they have any home buyer seminars coming up soon. These are free classes that will teach you more about the home buying process.
Financial Changes May Affect Your Mortgage Application
If you’re busy with the home buying process, it could be easy to overlook letting your broker know of any changes. This can prove to be a huge mistake!
It’s vital to keep them in the loop so that your mortgage isn’t affected. Any changes in your financial situation could potentially cause complications with your home loan. This is why you should contact your broker to determine how to proceed before you do anything.
The Take Away
Using a mortgage broker for a house purchase is starting to become very popular because of the competition in the industry. While you can save big bucks by using a mortgage broker, there are things you should know before contacting one. If you’ve performed your homework and are presently looking to purchase a house in the Anderson SC, you may want to learn more about the home buying process!