The Ins and Outs of a Mortgage Broker: Do You Need One?

With many big decisions in life, it makes sense to have a source to go to when you need help in understanding a deal. There is no greater time to need help than during the process of finding a mortgage loan. Because loans nowadays come in all shapes and sizes, it is wise to be selective in your choices and diligent in your research.

A mortgage broker can be a resource for guidance through the selection process. The broker will not actually make the home loan for you but will guide you through the process of selecting the right lender. With so many deals to be hand, a mortgage broker can help be sure you have covered all of your bases.

Here are the benefits and disadvantages consumers may experience when working with a mortgage broker:

Advantages

  • Credit Concerns – If you have special financial considerations to make like poor credit histories or a lower-than-average score, a mortgage broker may be able to better pinpoint the direction you need to go in to secure a mortgage loan.
  • Financial Difficulties – It may also be helpful to a broker when you are concerned about lacking down payment or closing cost funds. A broker will be well-versed in lenders who cater to financial difficulties.
  • Time – If you are looking for a lender, it can take a lot of time to scour the Internet and informational resources to find the right one for you. By employing a broker, you get out of doing the legwork it takes to find the right lender and mortgage loan for your situation.

Disadvantages

  • It Costs Money – Brokers do charge a fee for their services. The main disadvantage of getting help is the additional fees charged by the broker. Typically however, the fee is rolled into the loan at a higher interest rate or paid out as a closing cost by the buyer.
  • Not For Your Benefit – If you do not work with a reputable broker, chances are good they will not be looking out for the best interests of your situation. In fact, some lenders will not work with select brokers due to risky behavior and unprofessional tactics.

How To Find the Right Mortgage Broker

Locating a good broker can be done through referrals by your realtor, family, and friends. You can also find them online or through the local phone book. Look for those who are associated with the National Association of Mortgage Brokers (NAMB) to ensure they are licensed and have a proper level of credentials. The important step is to interview each potential candidate before signing on. High-pressured sales tactics and obvious lack of professionalism should be immediate red flags. Look for a broker who is thorough in exploring your situation and needs. Be clear about the costs of the brokerage fee and how they are to be paid out.

Remember that you can find a mortgage loan without the aid of a broker if you are looking to save money. If finding the right mortgage seems overwhelming and confusing, the professional services being offered by mortgage broker agencies can be a definite benefit when in search of a new mortgage loan.