Navigating the homebuying process can be a daunting task, especially for first-time homebuyers. At Innovative…
You have many options when looking for mortgage financing, including using a mortgage lender or mortgage broker. While anyone can use either option, there are benefits you might not realize with a mortgage broker.
Understanding how mortgage brokers work and what advantages they offer can help you decide which option is right for you.
What is a Mortgage Broker?
A mortgage broker works between you (the borrower) and the lender. In addition, brokers often act as consultants or neutral third parties to help you choose the right mortgage, and close quickly.
Most mortgage brokers, like Innovative Mortgage Brokers, have relationships with many lenders, giving you options to find the mortgage terms that fit your individual needs. In addition, they have a good handle on what each lender offers to determine which lenders might have a loan program that suits your needs.
Mortgage brokers help you throughout the loan process, gathering documentation, reviewing it, and helping you understand the underwriter’s requests. You’ll talk to your broker throughout the process, not the lender directly, getting the necessary information to complete the loan process.
How Mortgage Brokers and Lenders Differ
A mortgage broker doesn’t underwrite or fund loans. Instead, lenders underwrite and fund them.
Yes, you can go directly to a lender, but if you want to compare rates, loan options, or need help deciding which loan fits your needs the most, you won’t find that with lenders. Direct lenders have a set number of programs they can offer, at their rates. They can’t offer you a loan if you don’t meet the requirements.
Also, if you want to compare offers, you must complete a loan application which each lender, and each lender you apply to will need to pull your credit report. When working with a mortgage broker, you complete one loan application, your credit report is run only once, but may have access to multiple loan offers. The broker approaches the lender with a program you might fit into to help you find a suitable option.
7 Reasons to Consider a Mortgage Broker
If you wonder if a mortgage broker is right for you, here are seven reasons to consider it.
1. Mortgage brokers provide education/consulting
Mortgage brokers help you determine which loan is right for you. They may have many options for you and can help you understand the difference in your choices.
When you work directly with lenders, they don’t compare your options with other lenders’ offers; that’s your responsibility. A broker, however, will help you cover all your bases and make important decisions.
2. Mortgage brokers have more options
Depending on the number of lenders a broker works with, you may have several options for your mortgage financing. At Innovative Mortgage Brokers, we currently work with over 20 different lenders.
You may also get access to loans that aren’t available to the general public, as some lenders only offer wholesale loans, aka loans to brokers. It’s nice to have options when considering which mortgage is right for you.
3. Brokers represent borrowers
Mortgage brokers act as borrowers’ representatives. We will talk to the lender on your behalf. Since our staff is fully trained and vetted in all situations, we understand what to ask of the lender. We also know how to negotiate on your behalf.
We can negotiate rates and terms or even plead your case when something doesn’t fit the underwriting requirements, but you have compensating factors. We work closely with our lenders and know what the underwriters must see to approve you for a loan. We also constantly update ourselves on the program guidelines. We wok for you, and not the lenders.
4. Brokers walk you through the entire process
Applying for a mortgage can be overwhelming. When you apply directly with a lender, they may not provide as much hand-holding as a broker.
Our professionals work with you from start to finish, ensuring you understand the process and what’s needed. We’ll help you get the proper documentation so a lender can make an informed decision and explain when there are hiccups in the process, and the lender needs more information.
5. Brokers save you time
Getting at least three quotes when applying for a mortgage is always recommended. However, if you apply directly to mortgage lenders, you’re responsible for completing individual applications and providing documentation to each lender.
This can be time-consuming and overwhelming.
Brokers, on the other hand, do the legwork for you. After you complete one loan application and provide your required documentation, brokers send your application to as many lenders as they feel have a program that suits your needs.
You can compare your offers quickly and know which loan is right. If you’re buying a home, the time savings can mean the difference between winning the bid on your dream home or losing it to someone who already had their pre-approval letter and mortgage quotes.
6. Mortgage brokers may save you money
There’s never a guarantee that you’ll save money using a mortgage broker, but because they can shop around with different lenders, they can present you with as many options as possible.
Mortgage brokers must disclose how they get paid for their services. At Innovative Mortgage Brokers, we are 100% transparent with how and what we get paid while doing our best to get you the most attractive loan.
7. Brokers can help borrowers in any situation
Mortgage brokers are invaluable in any situation, whether you have great qualifying factors or struggle to find a lender that will approve you. With many loan options, including those not available to the general public, you may have more options to consider when looking for a mortgage loan.
Deciding whether a mortgage broker or lender is right for you is an important decision. Even if you have the best qualifying factors, using a mortgage broker may help you see more options that save you more time or money.