Why should I use a mortgage broker - A mortgage broker should be used because of the product availablility that they have. They can be your one stop shop for all of your home financing needs. They work with hundreds, and sometimes thousands, of different banks and lenders to find the program that is right for you. A mortgage broker, also called a loan officer, can generally assist with all credit types, all income types and all available loan programs types. Having one person or team of people taking care of and familiarizing themselves with all of your financial needs and your specific situation is much more beneficial than utilizing someone to buy your home, then someone else to refinance your home and then someone new to obtain a home equity line of credit. A mortgage broker should be your trusted advisor, an excellent source of information and a link to finding other qualified and trustworthy referral partners such as realtors, homeowners insurance agents, home improvement contractors, etc... Use of a mortgage broker obviously has tons of benefits. Over 75% of all mortgages originated over the past couple of years have been handled by mortgage brokers.Your mortgage broker can provide you with many more options than a banker in most cases. Having access to all types of banks gives brokers more options. While a banker has to do business based on their specific bank rules.
Using a mortgage broker gives you flexibility in regards to how you can have your mortgage structured. A mortgage broker is no different than a banker in the terms of providing a service, however the difference is what service they can be provided. To go into your local bank and apply for a loan will generally cause you to miss out on some value added programs that are not available to you through that banks product line. The overall time of closing is no different with a broker or a banker, and there is not an approval advantage with going with a bank, and can most times go quicker and smoother with a broker. There are many lenders out there that do not lend directly to the general public and that is where a broker can help you find those programs and terms that will benefit you most.
Mortgage lending is not like it was twenty or even ten years ago. Lenders have split up into niches. Will the bank that you apply at cater to your niche? Maybe or maybe not. Wouldn't it be better to apply with a full service mortgage broker who can find the bank or lender that has the best program and rates for your situation?
A mortgage broker has to disclose the amount of money that they are making in Yield Spread Premium (also called rebate). Bankers do not have to do this. Would you like to know how much your mortgage professional is making off of your loan, or would you like to be left in the dark?
What to Look for in a Mortgage Broker - When working with a mortgage broker to get a new loan for your home, there are certain things you should look for.
Possibly the most important aspect of a good mortgage broker is one who listens to you. You need to know that the person is working in your best interest, and how can they do that if they dont know what your interests are?
Interviewing your mortgage broker will help you decide if this is the person you feel comfortable working with on your largest financial transaction. You should be confident that your mortgage broker will provide you with the service and attention you require to insure a smooth transaction.
Get everything in writing upfront so that there are no questions at a later date.
If everything is in writing you know what to expect from your broker and what your broker expects of you.
A Mortgae broker should be accessible to you at reasonable times. They should always return your phone calls within a reasonable period of time.
Questions to Ask Your Mortgage Broker - If you are considering applying for a mortgage, it is important to ask questions and have your questions answered. You need to feel comfortable that the decision you are making is the right one. Here are some questions you might want to ask.
Do you have any client references? One of the best ways to find out if your broker is going to be right for you is by speaking to previous clients. Were they kept informed throughout the process? Were they happy with the service? Did the broker put them in the right loan program? Were the fees reasonable? Any reputable mortgage broker would be more than happy to give you references. It means a) You're a smart borrower who wants to know all the options and you don't rush into things. and b) You're seriously considering using this broker and just want to make absolutely sure.
What loan program based on my situation will be right for me? Your mortgage broker should be able to help you decide on a mortgage. There are numerous loan programs to choose from such as Adjustable Rate Mortgages (ARM), Fixed Rate Mortgages, and Pay Option Arms. They will also be able to help you determine what the length of your loan term should be; 15 year, 30 year , 40 year, or even 50 year.
Is there a prepayment penalty?
A prepayment penalty means that if you pay off your loan within a certain amount of time (by selling or refinancing) you will have to pay a penalty. Usually this penalty is several thousand dollars. Prepayment penalties are not always bad. In fact, you can usually get a lower interest rate if you have a prepayment penalty. But if you think you will be selling or refinancing your home within the next few years, it may be in your best interest to avoid having a prepayment penalty. In any case, you should at least know if you have one.
Difference Between A Broker And A Bank - A Mortgage Broker and a bank both sell mortgage loans to borrowers but there are many differences in the way they operate. So, how do you choose where to go for a loan? It all depends on what type of loan you need.
Local commercial or retail banks only offer their own mortgage products. If they do not have a loan for a home buyer, rather than searching for a suitable loan from other lenders as a mortgage broker would, they would have to decline the loan application, forcing the home buyer to find other lenders. This can be time consuming and be costly if financing is not secured in a timely manner.
Because brokers have access to such a wide array of mortgage products, they can often find a better loan for you than if you went directly to the bank.
The biggest difference between a broker and a bank is the number of lenders and programs they have access to. A bank is typically limited to the rates and programs that they offer themselves, while a broker has access to dozens (and in some cases hundreds) of different lenders. Generally speaking a broker is able to offer a wider variety of loan programs, and can rate shop for you.
