Mortgage loaning, especially for a beginner, is not an easy feat. Just like everyone, we need expert advice on how to go about this predicament. Supposed you finally found your dream home but lack the funds for it. Who do you turn to but the lenders? But you have to remember documents, getting approved and waiting can be tedious for a home buyer such as you.
Especially in2021, when mortgage loaning and property buying catapulted due to COVID-19. Reasons for this boom (check it out) can be because of panic buying, an urgent need to have a more secure and tighter home, and work from home scenarios can be some of them. However, the most important thing to note is that if you've been contemplating purchasing a home, the right moment is now, as interest rates have fallen and many are selling their property cheap.
But as a new homebuyer, what are the most asked questions about hiring a mortgage broker? After all, you need a guideline of some sort for this journey, so why not start with the basics? Maybe along the way, you can answer a question you've been burning to ask but have no one to ask to.
Question #1: What Is A Mortgage Broker?
In simpler terms, a mortgage broker is an intermediary between a mortgage borrower and a mortgage lender. They serve as the bridge of communication between the two and the borrower (their client's) advocate for the lender. A mortgage broker like the people from fidget.com.au knows the interest rates of each lender on their list, so they can tailor their services to what you can offer. This makes things easier for you as a homebuyer overall.
They are licensed professionals that do most of the legwork you'd do yourself if you choose a bank for lending. Their job description entails taking your information, managing documents, verify your employment and income, and pull up your credit card history. With these data in hand, they can analyze which lender will fit you, apply them, and get approved by the lender.
Question #2: Where Do Mortgage Brokers Get Their Pay?
These professionals can be paid by the lender from the commission they get. Occasionally, the borrower pays them. However, if we base it on law, the expert can't be paid by both. If the borrower wishes to tip the professional because of his excellent work, it is possible for a deal between the borrower and the broker. This is coined the borrower-paid compensation.
To add, there is a law that prohibits these brokers from placing hidden charges for their services and other deceitful acts. It's called the Dodd-Frank Act, which protects American tax-payers and consumers from abusive financial transactions. Therefore, consumers are encouraged to research and shop around for brokers, ask if there are fees and how much it will entail (usually 1-2% of the loan's overall amount).
Question #3: What's The Difference Between Loan Officers, Real Estate Agents, And Mortgage Brokers?
A lender usually employs loan officers. Their main job description is to write salaries with bonuses and offer loans within the bounds the lender offers. They are also in charge of meeting the broker and borrower, analyze, evaluate, reject, or approve a loan. This is only applicable when the lender himself isn't around, though.
On the other hand, mortgage brokers are either independent or working for a brokerage firm. Instead of being employed by a lender, they establish connections to various ones and make sure their relationship is harmonious and stable so they'll stay open for negotiations. They, in comparison to loan officers, can give the borrower a plethora of loan options.
Real estate agents are professionals working in an industry, required to take all needed tests to acquire a license, and are also known as real estate salespeople. Instead of meeting the borrower and broker, the real estate meets the borrower (now known as the homebuyer) and the property/house seller. They make negotiations about the price, with the agent being the buyer advocate, haggling for a more advantageous price.
Question #4: How Do I Know If A Broker Is Right For Me?
The benefits of getting this agent aren't anything to scoff at. For one, if you venture on your own in lending, it will take you days to send your documents, apply for pre-approval, meet the lender or loan officer, and wait for the approval once more. With a mortgage broker who has connections and established relationships, not only will you save on time by letting them do all the legwork, you also have a chance to benefits from perks like being able to loan a more considerable amount.
This transaction is a hassle is the communication that needs to be kept alive with updates and reminders. The mortgage broker will handle all of those seamlessly because (and we assume you will pick) a seasoned professional knows the industry's ins and outs, thus speeding up the closing time for the loan.
The best thing about having a broker, however, is the convenience. There's no need to pre-approve, do the process again and again with each lender to compare interest rates, closing costs, and other fees. The mortgage broker has all of that information, and you can compare these data right away.
Question #5: What's The Best Way To Choose A Broker?
The first rule of finding any professional is to ask close friends, family, or relatives for referrals. This serves as the purest and most honest review you can get, as these groups of people will neither profit nor benefit from referring a broker. They'll give you an honest opinion of a broker and recommend a better one through casual stories that started from your question.
If the first recommendation isn't available, you can always ask for referrals from your real estate agent. If they're an excellent agent, they'll also source you to another superb professional to not stake their reputation and trust. Most of the time, they'll refer you to an in-house mortgage broker from the same company or ring up a broker partnered up with them in the industry.
Make A Decision On Your Mortgage Broker
Once you have a potential mortgage broker candidate, look at their communication skills, approach to customers, attitude, and overall appearance. It is also suggested to interview them, just as you would do when looking for a real estate agent, a plumber, or even a nanny. Go with your gut feeling above anything, as your body won't send you weird signals if it picked up nothing suspicious.
