If you are a first time home buyer, a mortgage broker can be a very useful partner. Investing in a home is a big financial undertaking and you will want to get it right the first time you are doing so. A broker will assess your needs based on your financial situation, factor in your requirements and match you with different financial institutions that offer loans that you qualify for.
Advantages of Working with a Broker
If you are buying a house, why should you work with a mortgage broker?
i) A broker knows the prevailing interest rates on mortgage at his fingertips a well as the fees charged. Thus, he is in a better position to inform you which loan will be suitable for you.
ii) You will not have to do the leg work of looking for loans that match your requirements. The broker has a panel of lenders and will easily match your requirements to the loans available. This will save you time and disappointments from chasing the wrong lenders.
iii) With a broker, you are more likely to get loans at a better rate that if you go on your own. Most brokers have agreements with different lenders to provide special rates for their customers. Brokers usually have a good relationship with lenders because they bring is significant amount of business to them. In turn, their customers are rewarded by being offered lower rates and affordable terms of payment.
iv) Brokers working in a particular state or neighbourhood have experience in mortgage matters and will help you make an informed decision regarding the home you want to purchase and the loan you should take. This minimizes your risk of making decisions that may have negative financial implications.
v) Finally, you may not have to pay your broker. Lenders usually offer brokers an upfront commission for customers they bring to take loans as well as a trailing commission when the deal is sealed.
What to Consider When Choosing a Mortgage Broker
Choosing a broker can be difficult with many people claiming to be “professionals” nowadays. So, how do you choose the right broker for you?
1. Make sure the broker is licensed. Go to the state brokerage licensure offices and find out whether the broker you want to work with is recognized. Also, ask for credentials from the broker before you start working with him.
2. Get a broker who is experienced in mortgage matters in your state or neighbourhood. He should know the trends of the mortgage market and have connections with a variety of lenders. He should also be able to negotiate the best mortgage rates and terms of payment for you.
3. Before you sign up a broker, find out the fees that he will charge you. This should be stipulated in writing and not inferred to verbally or else you may have problems later on.
If you are a first time home buyer or a novice real estate investor, you should get a mortgage broker to help you get the right home loan for you.