If you've been finding it hard to choose a mortgage, you're not alone. Home loans…
Once you have decided that the only way forward to make that dream home purchase is through a mortgage, there is one vital decision you need to make. Are you going through the whole process with your lonesome, or are you going to seek the help of a mortgage broker?
This choice is important because the right mortgage option makes all the difference that might save you from paying thousands more in interest and fees. After all, home loans do not come in free size, and therein lies the challenge: how to find a mortgage that will suit you according to your financial needs.
In this article, we will list some questions you will need to ask yourself to guide you in your journey to find the right mortgage. Then, when the going gets tough, it may be time to get qualified advice!
What’s the difference between a mortgage broker and a loan officer?
But first, we need to define what exactly a mortgage advisor is.
As you maybe search online and try to read as much as you can about mortgages, you’ll keep encountering job titles that read as mortgage advisors, mortgage brokers, or even mortgage consultants. Essentially, all these professionals perform the same function. They review your financial capacity and background and listen to your loan needs and, armed with this information; they can go shopping around different lenders in the mortgage industry to find you the best home loan deal.
You’ll also read about loan officers, and there’s definitely a world of difference between them and mortgage brokers. When you go to a bank or a financial institution to apply for a mortgage, the person you’ll be speaking to is a loan officer.
Unlike mortgage brokers, loan officers work for a specific employer and are thus obligated only to offer you the specific loans and services their company can provide. Therefore, if your application gets rejected or there is no home loan available for you at the time, they do not have to make an effort to provide you with other services.
Why Borrowers Hire Mortgage Brokers
Everyone has their own specific needs, and there are definitely borrowers who would be better off talking to lending companies on their own. However, the mortgage decision is something you don’t have to make several times in your life. That’s why it is an understandable fact that lots of people are not armed with enough knowledge to wade into these waters.
To aid you in your decision-making, here are a couple of questions you can ask yourself for a quick self-check. We hope these help illuminate your thoughts as you ponder the choice of hiring a mortgage advisor.
How much do I know about mortgages?
Once you start to consider taking on a mortgage seriously, your parents might be the first people you might bombard with all of your questions. If you’re lucky, you may have already been given some background about this responsibility when you were growing up. But don’t be embarrassed if you are a full-grown adult whose only knowledge about mortgages was only gleaned from television and movies.
Even people who are already making a monthly payment to their mortgages are sometimes clueless about the simplest details like the interest rate they are paying for. In fact, according to a Bankrate survey, more than a quarter of borrowers have not even opted to refinance in the past year despite the savings they can make because they don’t actually know the interest rate on their loan.
How much of my personal time can I devote to my mortgage application?
This is a logistical and essential question to ask yourself as you plan on your mortgage because applying for one is time-consuming.
If you are fortunate, you might be able to take a day off work to run errands for your application, but this will mean lesser wages to a lot of people.
Do I plan on shopping around for the best mortgage?
Concerning the previous question, you will need to process your application a lot of the time due to the necessity of shopping around for the best mortgage deal. Many lenders do not publicize their offers until they have reviewed your information, so most of the time, you can only know about the available rates once you have sat down to speak with a loan officer. Therefore, you need to ask yourself if you are willing to devote your time to cruising the market to compare this or that loan offer.
Nobody said it was going to be easy for everyone. So don’t be one of the 47% of borrowers who skip on this essential part of the journey!
Have I already spoken to a lender / lenders?
Even if you do eventually decide to go with a mortgage broker, it will work to your advantage if you have a benchmark offer to compare the next deals that are put forward. You can also use this as a gauge to know if you have hired a good mortgage broker or if you should start looking for another.
Another benefit of dealing directly with a lender, to begin with, is the possibility of getting preapproval. Getting preapproved by a lender can be very empowering for a borrower. It can give you an idea of just how much house you should be looking for, and it can give you a better edge on the real estate negotiating table. In addition, if you can assure the agent or the seller that you can get funding, it might ensure a smoother transaction for your home purchase.
Do I know a mortgage broker I can trust?
Since the harrowing ordeal of the Global Financial Crisis, mortgage brokers still haven’t quite lost the bad rap they gained from the subprime mortgage disaster. But the survival of this industry despite the stricter regulations shows how necessary this service is to many customers.
Since you are reading through this article and/or already seriously thinking of hiring a mortgage broker, good for you! The next challenge is how to choose a good mortgage broker you can trust because trust will definitely be the foundation of your relationship. You can start by asking around through friends or even relatives who already have mortgages. As long as the reviews you are getting are from satisfied clients, you should be able to find a mortgage broker worth their salt.
If you get a recommendation from the real estate agent of the house you are buying, take note that many firms already have in-house mortgage brokers, and it’s quite normal for real estate agents to know a lot of names in the loan industry. However, it will still be better to get a personal suggestion from someone who has benefited from the service.
Am I willing to go read through all my mortgage paperwork?
Knowledge is definitely power. One of the advantages of having an advisor at your side is the protection you can get from the unethical business practices of some lenders.
If we’re going, to be honest, many of us don’t really have the time to read through all the fine print even when we absolutely have to! It can be doubly challenging when the text is teeming with industry terminology and jargon. Remember, a home loan is a long-term commitment, so it is our responsibility to know just what we will be signing up for.
Am I willing to pay my mortgage broker’s fees?
Finally, while the services of mortgage advisors are definitely not free, it is still quite possible to score some savings on your mortgage with the help of this professional. Mortgage brokers typically get a commission between 1 to 3% of the total loan amount. Therefore, it is important to get a private quote from at least one lender before going all out in your search, so you can compare how much you’ll need to pay without a mortgage broker versus when you sign for an offer with an advisor at your side.
The fees for the services rendered by your mortgage broker can usually be billed at closing. However, it is better if you can get this clear from your advisor from the get-go. Sometimes, instead of the borrower, the lender is the one who needs to pay the mortgage broker, and this will definitely be worked into your loan offer somehow.
At the end of the day, what you’re really saving is your precious time when you have the help of a mortgage advisor. And that, as we’re sure you’ll agree with us, is a resource that’s worth all the money in the world.