It is amazing how many home buyers go about getting a mortgage by going directly to a bank, credit union, or building society. Still others apply for online loans by going directly to private lenders. All those choices are fine as far as they go, but there is another option so many people inexplicably avoid: working with a mortgage broker.
This seems rather odd to those in the mortgage industry. Not only do home buyers get free mortgage advice from a brokerage, they also get access to a larger variety of mortgage products. There really is nothing to lose by seeking out a broker first. Even if a buyer cannot work out a deal with a broker, there are always the other options to fall back on.
The Mortgage Broker Difference
Perhaps people avoid mortgage brokers because they do not understand how it all works. In the simplest possible terms, a brokerage is an organisation that acts as an intermediary between lenders and borrowers. Brokers themselves have different responsibilities depending on where they are located.
For example, certified mortgage brokers in the UK are also financial advisors. They can help you find the best possible mortgage deal, guide you through the loan application process, and advise you as to how certain mortgage products will affect your personal finances. You can get a lot of free mortgage advice from a brokerage because you are not footing the bill. The brokerage gets paid by the lender.
In the U.S., mortgage brokers are not necessarily financial advisors to the same degree they are in the UK. But they still serve the primary function of finding the best possible deal and helping buyers navigate the application process. And therein lies the mortgage broker difference.
More Choices Mean Better Deals
The number one reason for going through a mortgage broker is choice. What does that mean? Well, consider going down to your local bank for a mortgage. That bank likely offers fewer than half-a-dozen different mortgage products. You will find the same thing with credit unions and building societies. So by going that route means you are automatically limiting your choices.
Contact a fully independent mortgage broker instead, and suddenly the door to your choices is wide open. Although there are some mortgage brokers tied to a limited number of represented lenders, a fully independent broker has no limits. An independent broker is free to seek out mortgage deals wherever these might be found.
Imagine having 25 deals to consider instead of just five. What do you think the chances of you getting the best possible deal are with five times as many choices? The chances are pretty high. That alone is reason enough to secure your mortgage through a brokerage rather than going right to a lender.
Help Along the Way
The other thing to consider here is the actual mortgage application process. When you apply for a mortgage directly through a lender, you are working with people who do not necessarily have an incentive to make sure your application is processed quickly so that your loan can be approved. The lender’s underwriters do not necessarily have an incentive to approve your application, either.
Sure, the bank wants to approve as many applications as it can. After all, it makes money on mortgage interest. But the individuals who actually make the decisions will still get paid even if your mortgage application is rejected. Things are different for a broker, though.
A broker doesn’t get paid until the lender actually makes the loan. Therefore, it’s in his/her best interests to do whatever he/she can to ensure your application makes it through the system in a timely manner. It is in his or her best interests to make sure you actually get the loan you’re after. His/her pay depends on it.
All of this adds up to help for you. Throughout every step of the loan application process, the broker is at your side lending a helping hand. This takes a lot of the stress out of applying for a mortgage. The broker helps complete paperwork; he or she is there to answer questions; he or she guides you through the process to completion.
If you are planning to get a mortgage in the near future, ask yourself this: what’s wrong with a little free mortgage advice from a brokerage? Getting your mortgage through a broker not only gives you access to free advice, but it also gives you a partner who has every reason to make sure you get the best possible deal in a timely manner. That is the kind of help you need to buy that house you’ve been dreaming of.