A mortgage broker is an intermediary between a financial institution that offers loans secured with real estate and for people who want to buy real estate. They can help you get a better rate and lower closing costs than you would get from a loan agent, who can only introduce you to the mortgage loan products that the bank currently offers. If you're looking for a type of mortgage that's less common, working with an insurance broker will give you direct access to relevant lenders. Whether it's best to use a mortgage broker or a bank depends on your specific situations and the mortgage options that both offer.
You can work with both to see who offers a better deal before moving forward with your home loan. In some cases, it may make sense to work with a local bank or credit union instead of one of the big banks if they can offer a special offer or better mortgage rates. Mortgage brokers have the ability to offer mortgage products from a network of lenders and provide access to a wider range of products than loan officers, who are limited to offerings from their own banks. A mortgage broker, with access to several lenders, could also be a good option for those who don't fit the typical borrower profile and might need access to more options to find the right product. The main advantage of a mortgage broker is getting help navigating the complex landscape of banks and lending institutions.
Mortgage brokers can also help loan applicants qualify for a lower interest rate than most commercial loans offer. A mortgage broker can simplify this process by connecting homebuyers to the right loans, preparing application materials, and guiding the borrower through underwriting and closing. Part of a mortgage broker's job is to “do the math and tell the borrower how much of the mortgage they might qualify for,” says Rick Masnyk, branch manager for Network Funding in North Smithfield, Rhode Island. For one thing, mortgage brokers often work with several lenders and can look for the best option. Working with a mortgage broker is a great option for anyone who wants to take some of the legwork and headaches out of the mortgage process. Whether it's best to work with a mortgage broker or get a mortgage loan directly from a bank depends on your financial situation and preferences.
Here's what you need to know about what a mortgage broker does, so you can decide if working with one will be the smartest choice for you. However, if the lender you use doesn't offer intermediary discounts and you also have to pay a brokerage fee, you may end up paying more for your mortgage than if you requested it directly through the lender without the broker's help. What the mortgage broker earns is that they will receive a commission from the lender, from you, or both on closing day. If your research finds that your current bank or credit union offers the best mortgage rates, find out if you can save more by financing your mortgage through them. Borrowers who use a mortgage broker get the benefit of a more personal experience and of having a licensed professional do the legwork for them. When considering whether or not to use a mortgage broker, it's important to weigh all of your options carefully.
You should consider whether or not there are any special packages available when using one, as well as any fees associated with their services. Ultimately, it's up to you to decide which option is best for your needs.