As of 2020, the mortgage debt in the U.S. was a staggering $10.3 trillion.
If you’re in the market for a mortgage yourself, you can go one of two routes. You can go straight to a mortgage lender or hire a mortgage broker to find a mortgage for your specific situation.
The latter is the most straightforward way of landing a good mortgage, but you’ll have to pay the broker a commission. Dealing with a lender directly is okay, but there’s a chance that they might try to upsell you or decline your application. So which route do you take?
To help you make the right choice, we’ll be showing you how to tell whether you need a mortgage broker for your mortgage.
What Is a Mortgage Broker?
A mortgage broker is an entity that facilitates mortgages between borrowers and lenders. The mortgage broker can be an individual or a company. It’s their job to decide what kind of mortgage is right for you and find you a good deal.
Some responsibilities of mortgage brokers include:
- Act as an intermediary between you and the lender
- Evaluate and prepare the required documents for your mortgage
- Take the borrower through the entire mortgage application process
- Explain the legalities of the mortgage borrowing and repayment
The right broker for your mortgage is invaluable when looking for a mortgage that aligns with your financial situation. Of course, hiring a mortgage broker is entirely optional but highly recommended in some cases.
When Do I Need a Mortgage Broker?
There are many instances when finding a broker for your mortgage may work for the best. Here are some of them.
You’re Too Busy to Look for a Mortgage Yourself
Most of us work busy schedules and can hardly find some time off work to look for a mortgage. Finding the right mortgages is an exhausting task that will take up a lot of your time. If you’re too busy to look for a mortgage yourself, then let a broker do all the leg work.
You Need a Mortgage Fast
Maybe you’re moving to a new place for your job, and you need somewhere to call home ASAP. Renting out a home is out of the question, so you have no choice but to borrow a mortgage for a new home. If you’re running on a tight deadline, hiring a broker for your mortgage is the right decision.
A good mortgage broker will use their vast network to find the right mortgage for you in a flash. That way, you can buy and settle in your home within the time limit.
You’re Borrowing Your First Mortgage
Borrowing a mortgage is a lot harder than most people think. If it’s your first time borrowing, you’ll likely need a bit of guidance and not from the internet. Who better to guide you through the mortgage process than an experienced mortgage broker?
Aside from familiarizing you with the process, the broker ensures you get the perfect mortgage for your case. Who knows, for your next mortgage, you might do away with a broker entirely.
You Have a Poor Credit History
Borrowers with less-than-stellar credit scores have a lot of trouble borrowing mortgages. That’s because most lenders don’t want to risk lending to individuals likely to default on their payments. However, this doesn’t mean that people with poor credit can’t land good mortgages.
Mortgage brokers help people with bad credit find mortgages that work for them. Whether via hard money lenders or USDA loans, the broker will help you secure a decent mortgage.
Pros of Using a Mortgage Broker
There are many upsides to hiring a broker for your mortgage. Some of them include:
Saves You Time and Effort
Finding the right mortgage takes a lot of time and effort. This makes it difficult for people with busy schedules to find a good mortgage. Thankfully, mortgage brokers can step in and take over all the heavy work.
Mortgage brokers can save you the time and effort it takes to look for a mortgage. While they do so, you can concentrate on other important stuff.
Brokers Have Better Access to Good Mortgages
Brokers will leverage their experience and broad network to find the best mortgage for your case. They know where to find the best mortgages at the best rates. They’re much better than blindly looking for a mortgage.
Proper Fee Management
Getting a mortgage involves various types of fees including, origination, appraisal, and closing fees. A good mortgage broker will help you juggle between all these fees and make timely payments.
The Cons of Using a Mortgage Broker
Hiring a broker for your mortgage has its fair share of downsides and risks. Here are a few cons of hiring a mortgage broker.
The Broker Fees
Hiring a broker means you’ll have to pay the broker on top of paying for the mortgage. This can be too costly for some individuals.
You May Not Get the Best Deal
Since homebuyers pay brokers on commission, some brokers may look for an expensive mortgage to increase their commission. You may be able to find a better deal on your own without paying any broker fees.
Finding the right broker can be quite a daunting task. But here are a few tips to follow to ensure you find the best one for you.
Mortgage Brokers Are Here to Help
Hiring a mortgage broker might be the right course of action if you’re shopping for a mortgage. Remember to do your digging to find the best broker to help you secure a good deal. Your new home awaits.
Looking for more advice on mortgages? Check out our other blog posts for more tips and information!