What Does a Mortgage Broker Do?
Meridian Home Mortgage are intermediaries between borrowers and lenders in the home lending market. They collect the required documentation—pay stubs, tax paperwork, and bank statements—to determine if a mortgage loan will be approved.
They typically work with multiple lenders to offer a range of mortgage programs and rates. The fees they receive are usually rolled into the cost of the loan.
They Save You Time
A mortgage broker can help you navigate the entire mortgage process. From finding the best home loan rates to closing your mortgage, they can save you time and money. In addition, they know how to close a loan fast and can provide you with valuable advice for the home buying process.
Another way they can save you time is by providing information about other costs associated with your loan, such as appraisal fees, credit report fees, and lender fees. This allows you to plan ahead for these additional costs and avoid surprises down the road. Mortgage brokers are also able to negotiate with lenders for you, which can save you money. This is especially helpful when it comes to the down payment requirement, as they may be able to negotiate a lower down-payment amount than you would otherwise have available.
Mortgage brokers can get you the best home loan by comparing offers from many different lenders. They can do this by getting a “good faith estimate” from each lender, which includes all of the fees and charges that will be associated with your loan. However, it is important to understand that these estimates do not necessarily embody the final terms of your loan. The actual terms of your loan may change, and this can lead to a higher interest rate or other costly fees.
One thing to keep in mind is that mortgage brokers often earn a commission from the lender, and this may influence their recommendations. Some borrowers worry that this will cause them to be steered toward loans that are not in their best interest. However, the National Association of Mortgage Brokers states that mortgage brokers have a fiduciary responsibility to only recommend loans that are in their client’s best interests.
Before you choose a mortgage broker, it’s a good idea to ask for references and testimonials. This will allow you to see how other people have worked with them and what their experiences were like. In addition, you should also ask if the mortgage broker is licensed in your state. If not, you should look for another option. You should also consider what days and times they are available to take calls or meet with you. This can be an important factor if you work during business hours and need to contact them after hours or on the weekend.
They Are Well-versed in the Industry
Mortgage brokers must be experts in the mortgage industry, including various loan programs, regulations, market trends, and more. They also need to be good communicators, as they often interact with clients to help them determine the right mortgage for their needs. Mortgage brokers should attend seminars and read industry publications to stay up-to-date on the latest mortgage and lending news.
In addition, mortgage brokers are able to compare quotes from multiple lenders, which is helpful when they’re working with a client on a tight deadline. For example, a buyer may be buying in a hot housing market and needs to find the right lender quickly. Mortgage brokers are able to streamline the process and make it much easier for the borrower by doing most of the legwork on their behalf.
While it’s possible for borrowers to apply directly to a lender to get a mortgage, it’s usually a better idea to work with a broker who has access to multiple wholesale lenders. This can save time and ensure that you’re getting the best possible rates and terms. Additionally, mortgage brokers can work with unique situations that would be challenging for a traditional lender to approve.
Generally, mortgage brokers are paid a combination of fees from the borrower and commissions from the lending institutions they work with. They can earn 1% to 2% of the total loan amount, which can either be paid upfront or added to the mortgage principal.
It’s important to ask a prospective broker how they are compensated before starting the process. This will give you an idea of their expertise and how much their services will cost.
When interviewing potential mortgage brokers, ask about their experience and exactly what they’ll do to help you with your loan. You should also learn more about the lender’s requirements, fees, and processing times.
If you’re ready to take the next step in home ownership, contact a Lendmire mortgage expert today. We’ll walk you through the process and help you choose the right lender for your unique situation. We offer a variety of loans, from traditional to jumbo, and can help you understand how each option will impact your overall borrowing power and monthly costs.
They Can Help You Refinance
Mortgage Brokers can help you refinance if you’re coming to the end of your current mortgage term or are unsatisfied with the interest rates on your loan. They can provide you with quotes from a range of lenders and compare options for you. They can also help you negotiate with a lender to get the best possible deal on your refinance.
However, it’s important to keep in mind that mortgage brokers make their money primarily from commissions on home loans they arrange for you. So, it’s important that you check the terms of any deal they present you with to ensure that their incentives are aligned with your own. For example, some brokers may receive ‘soft dollar’ benefits such as trips and exclusive access that could influence their recommendations to you.
If you have excellent financial credentials, a superb credit score and a large amount of equity in your home, it might not be necessary to use a mortgage broker. That’s because banks will probably offer you some of the most competitive rates on the market, especially if you are already a loyal customer.
On the other hand, if you are an aspiring home buyer who has less-than-perfect financials, a weak credit score or limited cash reserves, it’s almost certainly going to be worth your while to work with a mortgage broker. These individuals can be more adept at navigating the often complex world of specialized loans, especially for foreign buyers who tend to face a variety of hurdles when buying a property.
Another reason you might choose to work with a mortgage broker is that they can save you time by negotiating for you and processing your loan. This is a valuable service, particularly in hot markets where it can take days for you to find a lender and complete your home purchase. Mortgage brokers can also expedite the process for you if you’re moving on a tight timeline, for instance due to a relocation for work, and don’t have the bandwidth to search for loans on your own. It’s also worth examining what additional fees you might be responsible for when working with a mortgage broker.
They Can Help You Find a Lender
Mortgage brokers are licensed to help you find a lender, and they understand the advantages and disadvantages of different loans. They can also explain the various jargon associated with mortgages and can save you time by doing the research for you.
You should still consider doing some homework on your own to ensure that you are making a wise choice. Look at online reviews and talk to people you know about their experiences. Make sure to find out how much they charge for their services, who pays their fee and if you can expect them to work on commission.
If a broker is working on commission, they might prioritize their own commercial outcomes over yours. This could mean that they present you with offers that are not the best fit for your financial circumstances. Moreover, they may even have onerous payment terms buried in their mortgage contracts that you may not be aware of. This is not something you would face if you went directly to the lender.
When you meet with potential mortgage brokers, ask them about their experience, the precise kind of assistance they offer and whether they are familiar with government schemes available. It is also a good idea to check on their licensing status with the National Mortgage Licensing System and Registry.
Mortgage brokers are not to be confused with mortgage lenders, who actually process and approve loan applications. Mortgage lenders can be large banks or private organizations, like hard money lenders. While mortgage brokers understand the various loan options and can advise you on a suitable lender, they are not responsible for processing or approving a loan application or crediting funds.
They can, however, work as a liaison between the borrower and lender to facilitate the process. They will review the loan documents, order an appraisal and assist with completing and filing all the required paperwork. In addition, they can also serve as the borrower’s advocate while preparing for closing day.
For borrowers who are unable to meet the strict lending requirements set by most traditional lenders, mortgage brokers can be of great help. They have a wide variety of contacts and can offer more creative solutions for borrowers with less-than-perfect credit scores, low income or limited liquid assets.