Purchasing a new home is always an exciting event, but there’s no denying that it can also be stressful. One part that many people find particularly intimidating is shopping for and choosing a mortgage. After all, a mortgage is a financial decision that will likely affect the next several decades of your life — who wouldn’t be at least a little bit nervous? Using a mortgage broker is one option that many people choose to help them navigate the mortgage application and selection process. What advantages can mortgage brokers offer to home buyers, and what should buyers be aware of when looking for a mortgage broker? Let’s examine five reasons why working with a licensed mortgage broker can be a great call for today’s home buyer.
1. It’s easy to research a mortgage broker and learn about their credentials.
Before entrusting any individual with your financial information, it’s important to make sure they’re trustworthy. Fortunately, mortgage brokers are required to have certain credentials that protect consumers, such as a mortgage bond and mortgage broker license. One of the best resources for borrowers researching mortgage brokers is the National Multistate Licensing System (NMLS). The NMLS is a nationwide U.S. database of licensed mortgage professionals that you can use to verify your mortgage broker’s credentials.
When you’re considering working with a broker, simply find or ask for their NMLS number and use the NMLS Consumer Access Database to look them up. You’ll be able to see states in which they hold a mortgage broker license, any actions regulators have taken against them and other critically important information.
Naturally, you’ll want to meet with a mortgage broker before you begin working with them to make sure that you feel comfortable with them. But remember also that you can walk away from a broker’s services at any time and find someone else to work with if you find that the relationship no longer works for you.
2. Working with a mortgage broker can save you time and help you understand your options better.
Finding a mortgage on your own is often a lot of work. Researching and comparing mortgage options can consume huge amounts of time, and it’s often difficult to understand the fine points of each lender’s requirements. That’s exactly what a mortgage broker offers that makes their services valuable to consumers.
In the beginning, a mortgage broker will review your financial situation and use their knowledge of the mortgage market to determine much you may qualify to borrow. They’ll examine the same things that a lender will, such as debt-to-income ratio, credit score and down payment, and they’ll use this information to arrive at a rough prequalification estimate.
This provides several advantages. First, it will help you get a basic idea of your price range, which will help focus your search toward homes you can afford. Additionally, while you’re house hunting, a mortgage broker will be researching loan options that match your budget. You’ll save yourself the time and hassle of endless mortgage research and conserve your energy for the task of finding your dream home.
3. Mortgage brokers often have relationships with lenders that can help borrowers get a better deal.
A mortgage broker works with a network of many different lenders, including some lenders that may not advertise their loans to the general public. Lenders may choose to work exclusively through brokers as a pre-screening process that helps filter out borrowers who probably won’t qualify. Because they take the time and effort to cultivate these relationships, a broker can often offer access to lending sources that a borrower wouldn’t otherwise be able to work with directly.
Borrowers can also benefit from a broker’s relationship with a lender in the form of more favorable loan terms. If a broker brings a lot of business to a lender, the lender may, in turn, provide lower fees, more flexible payment terms and/or lower interest rates to borrowers who work with that broker. Conversely, some lenders that advertise attractive rates to the public may have hidden fees and conditions that can burn you, and a good broker will know how to spot these and help you steer clear.
4. A mortgage broker can help move your paperwork through the mortgage underwriting process.
The process of getting a mortgage can be long and complex, and many borrowers feel better when there’s a helping hand there to guide them through the reams of paperwork. A mortgage broker knows the process inside and out, and they can provide valuable guidance on things like filling out forms correctly and submitting documents through the correct channels.
This service can be particularly helpful and calming for first-time home buyers. A skilled broker will help guide you away from common paperwork pitfalls and provide you with tips to make your first home-buying experience smoother. Brokers also excel at coordinating all of the many moving pieces of a home sale, from loan officers to real estate agents to lawyers, and ensuring that everyone stays on the same page.
5. If you have bad credit or a complex financial situation, a mortgage broker can help you find a loan that works for you.
Every borrower is different and has different financial needs. Some borrowers may have bad credit, while others may have unusual financial barriers that may cause them difficulty in getting a loan. Even something as common as being self-employed can make the mortgage application process substantially more complex. A mortgage broker will help borrowers find lending options that match their financial circumstances. Today, there are lenders out there who specialize in working with almost every kind of borrower imaginable, but it takes time and expertise to find the right fit — time and expertise that a broker can offer.
