5 Biggest Benefits of Using a Mortgage Broker

5 Biggest Benefits of Using a Mortgage Broker

Whether you are taking out a new loan or refinancing an existing mortgage, finding a lender to work with is not an easy job for many borrowers. It often takes time and additional money, it comes with unplanned expenses, and it is essentially tiring and stressful. 

That is when a mortgage broker comes into the picture and acts as a link between you and potential lenders. They help you get preapproved, and find the best possible conditions for a suitable loan. If you are on the fence about the idea of hiring a mortgage broker, it is probably due to some old stereotypes about scams. 

Let us reassure you that the regulations around mortgage lending make no room for scams, and a mortgage broker can offer great benefits for some borrowers. Here we talk about the 5 biggest main benefits of using a mortgage broker. 

When Should I Hire a Mortgage Broker?

Hiring a mortgage broker can mean that you have a personal budget advisor, and you need to be honest and upfront with them. Having a credit score lower than 640 usually means that you will not get preapproved for a conventional mortgage, but you still have a chance for an FDA loan.

Not only that they help you find a suitable loan if you are not in a pristine financial situation, but they can help you save so much time and money even when you have a credit score over 640. Whatever your credit score and debt to income ratio are, you should set a reasonable maximum amount you are willing to spend, and consult with a mortgage broker.

The best advice you can get is that your broker should be someone whose references you checked and someone who knows the local market. If you opt for a direct lender, find someone who is as committed to the borrower as LBC Mortgage Florida has been for the past 13 years.

1. Waiving Fees

When you hire a mortgage broker you need to be certain that there are more gains than there are losses. A direct lender would probably charge you some origination fees, as well as appraisal and application fees. All this can be waived if you find the right broker.

Brokers work with lenders closely and get advantages for the traffic that they bring. And, as we know, in the process of buying a new house, any waived fee is desirable. Check if the sum of waived fees surpasses the fee that the broker charges.

2. Lowering the Interest Rate

Interest rate is certainly something to negotiate about during refinancing, especially. Mortgage brokers understand the market and they are usually educated in finance or economics, so they can find the solution for the best possible rate you can get. Additionally, they are working with multiple lenders, and all of them want to sell you their own mortgage. A broker takes that into consideration and plays the field, which can sometimes grant you a lower interest rate.

3. Saving Your Time

Anyone who signed up for any kind of loan knows how much paperwork you need to fill in, throughout the whole process. Having a mortgage broker saves you time and energy because they do the work for you. You will have so much more time on your hands because the mortgage broker does the legwork – from the application forms to scouring through possible lenders.

By saving your time, a mortgage broker is saving you money and gets you to homeownership much faster and less painful. They spare you the unnecessary cost of making a mistake during form application, allow you to have spare time after work, and commit to everyday tasks. Not many people have the comfort of two-hour-long form-filling sessions after a long day at work.

4. Having Access to More Mortgage Plans

The biggest benefit that a mortgage broker brings is opening you up to many other possibilities, that wouldn’t otherwise be available to you. Many lenders work exclusively with mortgage brokers or have special services solely for them. We’re talking mortgage deals that you could never find yourself. 

Lenders offer wholesale prices of mortgage loans to the brokers in their network. This means that a mortgage broker can get you a loan that has both lower interest rates, waived fees, and good insurance. 

Also, note that a good broker would respect your maximum set amount of money that you are willing to borrow. If you notice that a mortgage broker nags you to increase that amount unreasonably, then you should know that they are not working on your behalf. This kind of manipulation can be reported to the Consumer Financial Protection Bureau.

5. Working With Borrowers in an Unfavorable Situation

Mortgage brokers can immensely help you if you are in an unfavourable situation with your credit score and debt to income ratio. Homeowning is impossible for you without a mortgage loan, but at the same time, many standard mortgages are out of reach due to your financial situation. 

For starters, a mortgage broker can advise you on what you can do in a short period of time in order to increase your credit score. They also help you present your case honestly, but more presentable than you could do it yourself. And, of course, they help you connect with a respectful lender that works with people in your situation.

Key Questions to Ask Your Mortgage Broker

When in search of a reliable mortgage broker, you need to go into it informed and confident. Appearing like you know what you are doing can spare you many manipulation tactics that some brokers like to use.

What Are Your Credentials?

Every mortgage broker must have a passing grade on a specialized test called SAFE Mortgage Loan Originator Test. But, check their working portfolio, online reviews, and their formal education background to be sure you are working with the best possible person.

How Do You Get Paid?

A mortgage broker could get paid by the lender or the borrower, and their fee is somewhere around 1-2% of the loan. If you are paying the fee, you need to pay that amount upon closing. Otherwise, the fee will be a part of your monthly payment. If they are collecting the fee as a commission from the lender, it could open you up for more manipulation, but if you are paying, you need to have cash upfront and ready.

How Big Is Your Network?

The wider the network, the more options you have to choose from, it is as simple as that. You want a broker that doesn’t work with just a handful of lenders, as that could mean that they are working for them, and not for you. 

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