A mortgage broker is a third-party agent that connects borrowers with lenders. They usually have a few lender contacts and can help a borrower with a number of different circumstances. If you are in the market for a home loan, a broker can save you time and make the process easier.
The mortgage industry has undergone a few changes in recent years. Specifically, the Dodd-Frank Act restructured the fees a mortgage broker can charge. In many cases, the fee is tacked onto the loan amount. This means that the mortgage broker has less room to play with when it comes to getting you the best deal. So, how do you decide if a mortgage broker is right for you?
You’re likely to have more success going directly to a lender. For instance, some banks will even give you a special incentive if you make a deposit. That may be enough to make you think twice about dealing with a broker.
Another thing a mortgage broker might be able to do for you is help you decide what type of loan you need. Lenders offer a wide range of products, and it can be difficult to know which one to choose. Mortgage brokers can provide you with a list of loan programs that will fit your needs. And if you are dealing with a reputable broker, they can be a valuable resource.
If you are considering a mortgage broker, make sure that they are licensed. Some states require mortgage brokers to be licensed, and there are also laws regulating how they can operate. Also, check for reviews. It’s possible that a bad broker might be taking advantage of your ignorance.
Before signing on the dotted line, make sure to ask your broker for a full explanation of their fees. Some will charge you for their services, while others will just be paid by the lender. These fees can add up, so be sure to find out exactly what you are getting into.
As with any financial transaction, it’s important to shop around for the most competitive rates. Using a mortgage calculator can help you calculate the interest rate and the costs associated with your new loan. While a mortgage broker may be able to help you navigate the maze of loan options, it’s ultimately up to you to decide what’s best for your situation.
Getting a pre-approval from a mortgage broker is also a good idea. Borrowers should do this as early as possible. Not only will this help you figure out how much money you can afford, but it will also tell you what type of loan you are approved for.
Besides being a good way to get a better mortgage, a mortgage broker can help you figure out the best way to go about financing a home. Especially if you are a first-time homebuyer, a broker can recommend lenders with competitive terms and loan programs that are designed to meet your needs.