Obtaining a mortgage through a mortgage broker may be easier in the sense that you have someone to help you compare rates and manage the mortgage application process. However, when it comes to the eligibility criteria, you'll still have to meet the minimum credit, income and debt-to-income ratio requirements to get approved. The most important factor in buying a home, besides finding the perfect home, of course, is finding the right mortgage loan. A mortgage broker can help you identify the best options by consulting different lenders, which will give you access to a wider variety of products than you could find if you worked directly with lenders.
The difference between a mortgage broker and a lender is that a broker doesn't lend the funds for mortgages. If your mortgage application involves challenges, a broker who knows which lenders are most flexible can help. Specialty lenders that only provide mortgage loans, such as Rocket Mortgage or Better Mortgage, generally fall under the category of banks. Ultimately, you have a responsibility to find the best mortgage provider, whether through a broker or a loan agent, and to look for the best rate and lowest costs.
Many brokers also have access to a powerful loan pricing system, which quotes a mortgage loan for many lenders at the same time, accelerating and streamlining the process. Mortgage brokers can also help loan applicants qualify for a lower interest rate than most commercial loans offer. In some cases, mortgage brokers can get lenders to waive some or all of these fees, which can save you hundreds to thousands of dollars. Working with a mortgage broker to navigate today's market can be a wise decision, especially for first-time homebuyers.
However, a broker can make the process easier and expose you to lending opportunities that you may not have found yourself. A mortgage broker acts as an intermediary between a financial institution that offers loans secured with real estate and for people who want to buy real estate and need a loan to do so. If you know someone who recently bought a home, whether it's a family member, friend, or co-worker, find out if they used a mortgage broker. A mortgage broker can receive compensation through a combination of fees paid to borrowers and fees paid by lending institutions that want them to originate loans.
A mortgage broker can also collect the financial documents you'll need to apply for a loan and submit an application for pre-approval, in addition to providing you with information about the local market. A mortgage broker aims to complete real estate transactions as an external intermediary between a borrower and a lender. A mortgage broker works with everyone involved in the loan process, from the real estate agent to the insurer to the closing agent, to ensure that the borrower gets the best loan and that the loan is closed on time.