Interest rates on mortgages are at a historic low right now. That alone is a strong enough incentive to transition some people from wanting a house to buying a house. If you’ve spent the time working on your credit score as well, the opportunity might prove irresistible.
Of course, getting a mortgage is one of the more involved processes in someone’s life. You must organize paperwork and lock in the down payment you can afford. Then, you must find the right mortgage.
On that last count, many people turn to a mortgage broker for help. Before jumping into why you should work with a mortgage broker, let’s do a quick overview of what mortgage brokers are.
What Is a Mortgage Broker?
In basic terms, a mortgage broker acts as a middleman between a homebuyer and all of the lenders who offer mortgages. Mortgage brokers look for a mortgage that meets your needs.
Here are some of the reasons you might want to work with one.
1. They’re Often Local
Some mortgage brokers operate in distant parts of the country, but many of them operate as local businesses. That means they possess detailed knowledge about the local real estate market. This positions them far better to offer your mortgages that suit your needs.
For example, let’s say you plan on buying a home in a rural area. A mortgage broker will know if you’re a candidate for a USDA rural development loan.
That local knowledge also gives them some insight into whether or not a given mortgage is within the norm for the area.
2. Advice and Guidance
The home buying process can prove tedious even when it’s going well. Yet, for the inexperienced homebuyer, there are no clear clues for telling normal delays from abnormal delays.
A mortgage broker can advise you about the natural progression of the process. For example, if it feels like your loan approval is going nowhere, the broker can offer a sanity check. They will be able to tell you if the hold up is a completely normal delay.
In addition, they can often connect you with useful resources like real estate agents.
The Internet puts vast stores of information about mortgage options at a person’s fingertips. That doesn’t mean you can sift through all the fine print and make sense of it.
Mortgage brokers sift through that information on a daily basis. They can narrow down the mortgage options that best fit your needs far faster than you can in most cases.
Just as importantly, they can also explain why they excluded a given mortgage option or lender. For example, they might know that a given lender folds in excessive fees for a given mortgage option to boost its profitability.
As a bonus, you typically only fill out one application with the broker. The broker then uses that application and gets you offers from multiple lenders.
Making an appointment at a bank is often an exercise in frustration. Banks operate on a very fixed schedule. Plus, they take every federal off.
That system works great for the bank, but it’s deeply inconvenient for most working adults. Most people end up taking time off of work for their bank appointments. It can feel a bit like punishment for wanting a mortgage.
Brokers typically aren’t married to an 8 am-5 pm schedule. That means they can more easily work around your schedule. They can stay late in their office for a meeting or even take an after-hours call.
A traditional bank typically offers a very small number of loan options. Your bank might only offer 15-year and 30-year fixed-rate mortgages, along with one federal mortgage program. If you only investigate the options with your local bank, you end up with what they offer and not necessarily what you need.
Brokers don’t work for any specific bank, which frees them from those kinds of limitations. They can present you with a 10-year fixed-rate mortgage, a 30-year adjustable-rate mortgage, or even a VA loan option if you qualify.
6. Paperwork Management
Applying for and getting a mortgage takes a lot of paperwork. Some of that paperwork comes from you and some of it comes from the lender.
A good broker helps you manage that pile of paperwork. This typically includes things like:
- A list of your assets
- Income documentation
- Proof of employment
The broker will also ask for permission to get a credit report on you. By assembling all of this paperwork at the get-go, the broker helps ensure you get the best deal for your financial situation.
7. Fee Transparency and Negotiation
Banks bake all kinds of fees into their mortgages. Some of the more common ones include:
- Appraisal fees
- Application fees
- Attorney fees
- Title search fees
- Origination fees
These fees can add a tidy sum onto the overall cost of your mortgage above and beyond the principal and interest. While banks must disclose all of the fees, it’s not always obvious.
Mortgage brokers typically charge a standard rate for their services, which adds some fee transparency to the process.
Brokers can also use their knowledge of mortgage types and specific lenders in negotiating fees. They may know that a specific lender won’t budge on certain fees, but will usually drop other fees. A person approaching a lender directly will often find negotiating those fees a much more difficult process.
Mortgage Brokers Make the Process Smoother
Nothing will make the mortgage process something that people enjoy. It’s time-consuming and detail-oriented. What a mortgage broker does is make that process less miserable.
They free you from the most time-consuming parts and help you manage the essential details. They can help educate you about why some mortgages provide a better deal than others. They can even do some negotiations that keep the fees a little more reasonable.
Ascend Mortgage specializes in connecting future homeowners with the right mortgage. If you’re in the market for a mortgage or have any questions about our services, contact Ascend Mortgage today.