There are many alternatives available to you when you need a mortgage to purchase or refinance a house. You may compare lenders and submit an application straight to the one you choose. Alternately, you may seek the assistance of a mortgage broker, who can help you select a lender and guide you through the application process.
Here’s how to locate a mortgage broker if using one seems appealing.
- In order to find a mortgage for their customers, mortgage brokers, who are authorized experts, interact with a number of lenders.
- Mortgage brokers typically charge between 1% and 2% of the mortgage amount and are paid by either the lender or the borrower.
- Ask your real estate agent, neighbors, or other locals for advice if you need help finding a mortgage broker. Additionally, you may look for a mortgage broker online.
What Is a Mortgage Broker?
A licensed expert who has the ability to negotiate with several lenders to locate, at least theoretically, the best mortgage for their customer is a mortgage broker. A mortgage loan officer, on the other hand, works for a specific lender, such a bank, and can only suggest the mortgage products offered by that institution. Contrast a mortgage broker with a mortgage banker, who closes and finances a mortgage using its own cash.
Why Use a Mortgage Broker?
The benefit of working with a mortgage broker is that they have connections with a variety of lenders and can help you find the most suitable and/or affordable lender for your requirements. If you have had credit issues in the past, for instance, and require a lender who is willing to deal with borrowers in your circumstance, a broker may be very useful. Mortgage brokers may also assist you with gathering the necessary paperwork and completing your mortgage application, which is sometimes difficult, particularly for first-time applicants.
How to Find a Good Mortgage Broker
You could have access to a few—or perhaps a lot—of mortgage brokers depending on where you reside. Here’s how to make the field smaller.
If you’re utilizing a real estate agent, they should be able to suggest one or more mortgage brokers in your neighborhood. Referrals from friends and neighbors who previously utilized a broker may also be helpful.
You may hunt for a mortgage broker online if you’re new to the region and lack any local connections. There are several websites that provide listings of the “best” local brokers, but their selection criteria aren’t always obvious. FindAMortgageBroker.com is one well-known website that states clearly that “The inclusion of a mortgage broker on this site does not imply an endorsement or recommendation.”
Local mortgage brokers are also included on review websites like Yelp, often with helpful feedback from previous clients.
The Federal Housing Finance Agency predicts the average mortgage size in 2020. (FHFA)
Check Them Out
There are certainly dishonest or inexperienced mortgage brokers, but there is some protection under state and federal law. The SAFE (Secure and Fair Enforcement for) Mortgage Licensing Act of 2008, which establishes requirements for the licensing and registration of state-licensed mortgage loan originators, regulates mortgage brokers. Mortgage brokers must also finish certain courses, pass a written exam, and allow an FBI background check, among other criteria. State laws may potentially be more stringent than those set down by the federal government.
Use the free online tool Consumer Access provided by the Nationwide Multistate Licensing System to search for a mortgage broker’s license status in your state. It will also reveal if the broker has ever faced any disciplinary measures.
You may browse a sizable list of mortgage brokers on the Better Business Bureau’s website by area and, when appropriate, see their BBB letter grades.
Just as you would while looking for a mortgage, keep in mind that you may compare mortgage brokers. Try another interviewee if you don’t feel comfortable with the first one.
Questions you might want to ask include:
- Which lenders do you work with the most?
- Have you ever had customers like me who needed a mortgage?
- How much do you think you might possibly save me?
- Who pays your fees and what are they?
- What steps do you regularly take, and how long does it usually take?
Even if you’ve already chosen a mortgage broker, it will be in your best interest to look at a few mortgage websites to ensure that the interest rate your broker proposes is one that is competitive with other offers on the market right now.
What Do Mortgage Brokers Charge?
Either the borrower or the lender pays the mortgage broker. They cannot be paid by both, according to the law. They must also make their fees known right away.
The broker typically gets 1% to 2% of the loan’s total amount. For instance, they may earn $3,000 to $6,000 on a $300,000 mortgage. If you’re paying for it, the charge is often payable at closing or may even be folded into your loan.
A number of additional regulations were placed on mortgage brokers by the federal Dodd-Frank Act in 2010 in an effort to safeguard customers from unfair business practices. One of them is that lenders are not permitted to link a broker’s pay to the loan’s interest rate. The goal of the regulation was to prevent mortgage brokers from pressuring their customers into high-interest loans, since this has sometimes occurred in the past.
Do I need a mortgage broker?
It mostly relies on you if using a mortgage broker would be beneficial. Hiring a mortgage broker may not be necessary for you if you are acquainted with the various mortgage kinds, feel comfortable looking for a lender, and have the time to devote to the procedure.
Are mortgage brokers worth it?
Broker fees for mortgages range from 1% to 2% of your loan amount. They may often save you enough money and time to more than cover the cost of their services if they execute their job correctly.
Where do I file a complaint about a mortgage broker?
If you’ve had an issue with a mortgage broker and want to file a complaint, the state licensing board for mortgage brokers would be an excellent place to start. On its website, the American Association of Residential Mortgage Regulators maintains a list of its member organizations along with links to their homepages.
The Bottom Line
A mortgage broker might help you save time and money if you’re looking for a new mortgage. Asking around for referrals is the greatest method to locate one. Additionally, you may search for brokers online and see whether they have ever faced any disciplinary measures.
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