4 Reasons to Use a Mortgage Broker

A mortgage broker acts as a liaison between prospective homebuyers and lenders. Using a network of lenders with whom they have relationships, mortgage brokers help you find the right mortgage for your financial circumstances and collect commission from the lender for doing it. The following points outline four reasons it may be to your advantage to use a mortgage broker for your home loan or to refinance your mortgage.  

Mortgages Are Their Only Business

A mortgage broker’s sole focus is on getting you into an approved home loan. Traditional lenders such as banks and credit unions offer a wide variety of services. Their loan officers may or may not specialize in the type of mortgage lending you need.

There are mortgage brokers who target only first-time home buyers and are familiar with the challenges they face in getting a loan. Other mortgage brokers focus on mortgage refinance loans. The added knowledge that comes with specialization is a benefit to you. A mortgage broker can be a valuable resource in the application process as well. The broker can advise you as to required documentation and the likelihood of your getting a loan from any of the lenders with whom he works based on your individual financial circumstances.

More Options, No Additional Cost

There should be no additional cost to you for using a mortgage broker. Most lenders charge an origination fee of 1 percent of your mortgage and that is folded into the total mortgage balance. You should be wary of mortgage brokers who charge additional fees, reputable ones do not. The mortgage broker is paid a commission by the lender for bringing them your business.

Unlike a traditional mortgage lender, such as bank, credit union or mortgage company, the mortgage broker can access a network of lenders with whom he works. You are not locked into the rates and terms offered by one institution.

Mortgage brokers can shop your loan to a variety of lenders for the best interest rate. If you have good credit and appear to be a sound risk, lenders will compete for your business. through your broker, saving you time.

Additionally, in good or bad economic times, mortgage brokers will have access to the most competitive interest rates and loan terms available in the marketplace.

Adapting to Your Circumstances

Again, because the mortgage broker has access to many different lenders, he may be able to find a lender willing to work with you even if you have poor credit. In working with one traditional lender, you are locked into the lending terms of that institution. As with interest rates, your mortgage broker can shop for the best terms available to you given your particular circumstances.

They Are Motivated

Traditional lenders, even if they are on commission, balance the best interests of their bank, credit union or mortgage company against your interest in getting a loan. A mortgage broker works for you and only is paid if you close a loan with a lender he represents.