Finding a good mortgage is not that easy as just snapping your fingers. Moreover, each decision on this matter is crucial, that is why we need to know what does a mortgage broker do since he is a link between you and your bank. Will he help you? You will know if you read further!
Who Mortgage Broker Is and What Does He Do?
A mortgage broker is someone who is very good at finding the best mortgage deal for his clients who either are people who want to buy their first home or people who want to refinance their homes. A mortgage broker must know about all the available mortgages, how they work, and find out which one fits his client’s needs. In addition, he has knowledge of the market and particular details about achieving a better mortgage deal for his clients.
In order to find out what does a mortgage broker does, we will give you an overview of the way a mortgage works and how a mortgage broker can help you in finding a good one. Let’s look at this step by step:
- Complete mortgage application
- Set your goals and needs
- Look at your debt ratio
- Check your credit score
When you decide to buy or refinance your home, you will send an application to the lender of your choice. Again, it is up to the mortgage broker to help you choose the best lender since he will provide you with many options. He knows which lenders are best in doing what kind of loan that is why he can guide you through this process.
Before going shopping make sure you know what your needs are. How much do you need to borrow, how much is the down payment, what are your monthly payments. Actually, most people don’t know the answers to these questions and that is why they go with a mortgage broker who will help them in getting all the answers. Then he will tell you how much the lender asks for in down payment and private mortgage insurance if any.
Debt ratio (the ratio of your income-mortgage amount-debt reduction). You want this number to be less than or equal to 33%. Some lenders have higher cuts, for example, 39%, while others are more flexible.
Your credit score. The lower the number, the better. A good mortgage broker will know what is good for your situation and then he will find that fantastic mortgage that fits your situation.
A mortgage broker can save you a lot of money by finding a better deal for you. Yes, all this process can be done without the use of a mortgage broker but it is much easier with him.
Alternatives for Mortgage Brokers
Some people think that there are only two ways of doing this: the first one is to find a mortgage lender and the second one is to find a mortgage broker. The first method is less interesting since you will do all the work and search for your ideal mortgage one by one and that can be quite time-consuming. If you choose this option, yes, it will be cheaper since you won’t need any professional help but it can be more complicated and time-consuming than just asking for some help from a broker.
However, there are 3 options:
- Visit a credit union directly
- Go to your financial institution
- Go to a new lender directly
All these ways are united by the fact that you can lose a lot of time on them and still achieve worse results than a mortgage broker can do because it is his job.
Advantages and Disadvantages of Having a Mortgage Broker
The advantages of working with a mortgage broker are clear. In case you want to buy a home, you need to know all this information about credit scores; debt ratio; bank loans; and other stuff and if you don’t know them the best thing is to ask someone who does. A mortgage broker has this information and he knows how to organize it properly.
Now, if you want to refinance your home, this is another case where you will need some advice. Our advice is to contact your existing lender since they can help you with everything without taking any risk. However, if you are new on the market and don’t have any options yet, then we would recommend choosing a mortgage broker. He will be able to show you the best bank loan for your budget and financial situation.
Now, the most important thing is to find a good mortgage broker. There are many of them out there so how can you tell if he is good or not? Start your search in local newspapers and magazines, he should be there. The next step is to ask your friends for their recommendations and you will see that there are people who know a lot about this profession, such as mortgage brokers in Halifax (Canada). Then Google (or yahoo etc. ) should help you in finding the best mortgage broker in your area.
Disadvantages of having a mortgage broker can be not that obvious. First of all, you will pay for his services and most people think that it is not fair since banks and other lenders give you this credit at lower interest rates. But they don’t ask you for any money upfront so why should you doubt a mortgage broker?
In addition, some people think that mortgage brokers are just salesmen who are there to get your money. It is not true since they have no benefit from one thing or another. However, if you ask for their services you may need more documentation.
The last inconvenience of hiring a mortgage broker is that there will be some banks to which you won`t have access since they work only with clients directly. So if you have a lender that you want to work with it is better to ask him whether he works with mortgage brokers or not.
What is the conclusion about mortgage brokers? They can help you save money, time and achieve higher results. There are some who are better than others so be careful while choosing one! Good Luck!