If you’re looking for a home loan,
you may have heard people mention mortgage brokers.
But what is a mortgage broker and should you be seeking
the services of a mortgage broker or a bank?
You can think of a mortgage broker in the same terms
you think of an independent insurance agent. When you
go into that agent’s office, you present your
needs and the agent searches for the insurance companies
that can provide you with the best coverage at the best
prices. This is the same basic service provided by a
mortgage broker.
When you choose a mortgage broker, you’re asking
this person (or company) to search through mortgages
offered by various lenders for those that would most
closely suit your needs, and to provide the options
with the best prices. The benefit is that these brokers
know details about the banks, credit unions and other
lenders that you may not know – which ones are
most agreeable to financing homes for people in your
particular situation. The information isn’t secret,
but it will take some time and effort for you to learn
what the mortgage brokers have at their fingertips.
Why would someone provide that service? For a fee,
of course. So that means that you’re going to
be paying a broker fee if you choose a mortgage broker
to handle the search for you. Is it worth the cost?
Only you can make that decision, but there are some
things to consider.
If you’re financing a non-conforming property
(loans above the current acceptable maximums of Fannie
Mae and Freddie Mac), you’ll need a lender who
offers jumbo loans. If you’re self-employed, you’ll
need a lender who accepts stated income rather than
demanding full documentation of your income. If you’ve
had credit issues, you’ll need to find a lender
that works with less-than-perfect credit ratings.
Does that mean that you can’t seek out a bank
or traditional lender if you fall into any of these
categories? Naturally, those options are still open
to you – regardless of your specific needs. You
can do some research on your own and find many lenders
who work with borrowers in your situation, and you may
very well find exactly the lender you need to accomplish
your goals.
If you should decide that a mortgage broker is a good
option, you should be careful. Don’t agree to
make a large payment up front. Get a written breakdown
of any fees you can expect and a detailed account of
what those fees cover. Remember that a mortgage broker
is only as good as his reputation. Ask around for recommendations
before you choose. |
