How to Find a Mortgage Broker
There’s no hiding the fact: buying a home can get a little tricky. From researching terms to finding the best deals, buyers can sometimes feel like they’re in over their heads. In this situation, they might seek out a mortgage broker. But how to find the best one?
With mortgage brokers, it’s best to consider reviews and clients. Look around extensively, and do your research before committing. Remember to keep a broker’s rates in mind- they could end up being a small fortune. When looking for a broker, the name of the game is time. So take your time to research a broker and decide if he or she is best for you.
So, without further ado, let’s assemble a checklist of broker-finding responsibilities. This article will also discuss the advantages and disadvantages of hiring a broker. By the time you’re done reading, you’ll have all the info you need to decide if you want a broker and find one if need be.
What Is a Mortgage Broker?
When first-time home-buyers look for loans, they often struggle. They may not be acquainted with loan terminology. They may not know where to find a good deal. They may not even know what a bad deal looks like.
This is where a mortgage broker comes in.
Mortgage brokers help home-buyers by loaning them their skills and expertise. Brokers are seasoned, trained professionals who use their skills to find deals on mortgages. With years of experience, they can bring the best offers to their clients. With all those offers to choose from, clients often get the most affordable deals.
Hiring a broker may seem like a no-brainer- but how do you go about it? What should you consider before hiring?
Get Your Credit in Line
The first thing to do when looking for a broker is to get your house in order. Make sure your credit is as high as you can get it before looking for a broker. This will get you more offers and help your broker find mortgages once you’ve hired them.
There are many ways to get your credit up, and there are many sites that will let you check it for free. Be wary, some sites will lower your score for checking. Others may want a fee for their services. Try to find one that won’t do either.
One way to increase your credit score gradually is the grocery method. You may be familiar with this folk-remedy- you may even think it’s a wives’ tale. The idea is to only use a credit card to buy groceries. Then, at the end of the month, pay off your debt with all the money you saved not buying groceries.
Another way is to budget, budget, budget. Having a working budget will help you get your finances in line. No more missed payments, no more big hits to your credit score. Keeping up on your finances is far and away the best thing you can do for your credit.
Finally, you might try requesting a copy of your credit history. With this, you can dispute any errors and pay up on delinquent accounts. With problems disappearing everywhere, your credit will start growing like a weed in the sun.
Look Up Client History
Just as you might look up the reviews for a fancy restaurant before dropping $50 there, you might look up reviews for brokers. Asking to speak to a former client is an excellent way to do this. Former clients know your broker and can tell you whether the experience was worth it.
Keep in mind that brokers are profit-incentivized. They want to make money, and they’ll take any advantage they can get. Thus, they may send you to a client they know will give a favorable review. So you might be getting a biased picture if you ask your broker in person.
If you can, try to find independent reviews. Searching a broker’s name on the internet along with ‘review’ may yield helpful results. In this case, you’ll be getting a random, unbiased sample. From here, you can make your decision: are they trustworthy or not?
Never take a broker at their word. If they say they’re the best, put it to the test. Make sure to find prior clients and reviews and consider them before hiring a broker.
Call More Than One Broker
When you’re looking for a mortgage broker, you’re going to want to consider more than one source. Calling more than one broker gives you information- information about rates, reviews, and all other helpful aspects. With all of this at your disposal, you’ll be more likely to make the best decision for you.
The disadvantage of only considering one broker lies, again, in bias. Of course your broker will present the best possible picture of their services. They’re trying to get clients! Going to other brokers will help you figure out if their claims are legitimate. You may find lower rates for better services.
So, never settle for the first thing that comes your way.
You may also want to introduce an element of competition into the mix. Getting brokers to compete for your business is a great way to squeeze the best possible rates out.
Finally, going to multiple brokers can help you figure out which one works best with you. Brokers are people too, and you may not jive with the first one you go to. Finding one you like will make the process more pleasant for everyone.
If you’re looking to get a mortgage, it’s safe to say you’ll be dropping a lot of dough. Over the years, mortgages can add up to far more than what you paid for your house. Thus, saving up anywhere will help you stay financially stable and get that mortgage paid off sooner.
By comparing rates on different lenders, you’ll be able to find the best rates possible. Doing your research is the first step in the direction of massive savings.
In addition, different lenders may have different skill sets. They may be able to negotiate better deals for you. For instance, one lender may be able to get a lender to waive certain fees. Another may be especially good at getting lenders to compete. This will drive down your overall rates.
But how are rates decided for individual brokers?
Most often, brokers will decide their rates as a percentage of the overall loan secured. So, if you get a $500,000 loan, your mortgage lender might take 1% of that loan. That totals up to $5,000. That’s no small fee.
By comparing rates, you make sure you’re not getting fleeced. If you do your homework, you’ll be able to find the lowest possible rates for the best services you can find. Hop on the computer, call some lenders, and write their rates down. After that, compare, compare, compare.
It’s tempting to do it the easy way. Taking whatever comes first seems like the best way to get started on your home-buying journey. Don’t fall for it. If there were shortcuts, everyone would be taking them. When it comes to an investment this big, invest in time and research.
Advantages to Getting a Broker
Here are some advantages to hiring a broker.
1. They Have Experience
Brokers know the field and will be able to find the best deals. Most likely, they’ll check for deals in some of the same places they checked for their other customers. With all this knowledge and research, brokers make for the best deal-finders around.
2. They Know Their Stuff
Mortgage brokers know everything there is to know about mortgages. Who’s offering them? Who’s got the best rates? How are rates measured and how much will a deal cost you over time? Will my finances fit with this loan? A mortgage broker will know all of this.
3. They Can Help With Documentation
When finding a mortgage, you’ll need a lot of documentation. From identification documents to financial transcripts, you’ll be swimming in required documentation. Without a broker, you may end up missing some. This could reflect poorly on you, or it could just be an inconvenience.
Disadvantages to Getting a Broker
And here are some of the disadvantages.
1. They Can Be Costly
As we mentioned above, a broker will usually charge a percentage of your loan. This price can fly sky-high if you’re looking for a bigger mortgage. If you can’t swing the costs, it may be a good idea to figure it out on your own.
2. They’re Self-Interested
The US and its people are forever traumatized by the financial crash of 2008. While brokers are looking to help their customers get loans, they’re also looking to turn a profit. This may lead some brokers to work against your best interests in favor of theirs. Make sure you trust your broker.
3. Trust for Brokers is Falling
Across the board, trust for brokers is falling. Some lenders won’t even do business with them, since brokered loans are more likely to default.