Should You Use a Mortgage Broker?
A Home Buying Article Contributed by Elizabeth Fox-Wise
If You are Considering a Home Mortgage You Might Be Wondering If You Should Use a Broker
A mortgage broker is essentially a middle man who brings buyers and lenders together for the purpose of originating a home mortgage loan. Using a mortgage broker is one option for securing a mortgage. The other option is to skip the broker and apply directly to the mortgage lender for your home mortgage.
The answer as to whether or not you should use a mortgage broker is a very personal one. Some people feel better having a mortgage broker assist in the mortgage loan and origination process. Other home buyers deal directly with the mortgage lender and are quite comfortable doing that.
Who Should Use a Mortgage Broker?
You should probably hire a mortgage broker if you have no knowledge of mortgage loans and real estate transactions. A mortgage broker is typically quite knowledgeable with the mortgage process and they can help you through it and advise you along the way.
It would also be a good idea to use a mortgage broker if you are not comfortable negotiating with lenders over mortgage terms and rates. A good mortgage broker, who represents several mortgage lenders, will do all of the negotiating for you and get the best mortgage rates and terms for you as possible.
You may also choose to use a mortgage broker if you do not have any established relationships with lenders. A good local mortgage broker will know most of the mortgage lenders in your area, which often helps them to get better mortgage rates than you could get for yourself.
On the other hand, if you have dealt with mortgages and real estate purchases before, are comfortable negotiating financial options until you get the right mortgage offer, and/or have contacts within the mortgage lending population, then you may not care to use a mortgage broker and would prefer instead, to approach mortgage lenders directly to apply for your home mortgage.
If You Decide to Use a Mortgage Broker, Choose Wisely
There is no licensing agency for mortgage brokers; therefore, anyone who wishes to call himself a mortgage broker can do so. Therefore, it is important to choose a mortgage broker carefully. You want a mortgage broker who is experienced in mortgage brokering and who represents a large enough number of lenders to provide you with mortgage rates and terms choices.
Be sure to hire an established, experienced mortgage broker with a track record in the mortgage brokering industry.
As the mortgage broker, in advance, what fees, if any, he charges for his service. Some mortgage brokers will charge an up front flat fee just for using his service. Others do not. Compare the fee rates before choosing. This does not mean the cheapest mortgage broker is always the best. If you choose a mortgage broker with fees, be sure it is because you feel the mortgage broker is worth the extra expense.
And finally, ask the mortgage broker for some references, and spend some time checking them out.
