Choosing a mortgage can be difficult, even for an experienced homebuyer. You could complete all the home loan processes on your own, but that would probably mean many phone calls and a hefty amount of paperwork. Instead, you might think about working with a mortgage broker to alleviate some of the work and pressure.
A mortgage broker can help a borrower save money over the life of the loan, and considerable time and work during the application process. Discover some Pros & Cons below to help you make the best decision.
PROS OF USING A MORTGAGE BROKER:
1. Expertise in the Market
One advantage of working with a Mortgage Broker is the expertise that they offer in the home buying and refinancing process. They have years of industry experience and can advise their customers in the best way. They also have up-to-date knowledge of the current housing and lending markets as well as knowledge of what type of loan may be most appropriate for specific borrowers and their unique circumstances.
2. A Single Application
Home buyers who work with a mortgage broker only have to submit a single application for a new loan. There is no need to complete several different applications or provide multiple copies of financial documents to various lenders. The mortgage broker does most of the legwork saving you time and energy that could better be spent dreaming up interior design ideas for your new home.
3. Better Rates & Potential Reduction of Fees
Mortgage brokers have access to a wide range of lenders and loans. A good Broker will use their expertise and negotiating skills to help their clients find the best mortgage deal for their specific needs and financial situation. Mortgage brokers can help borrowers save time and money by comparing loan options and rates from multiple lenders, and they may be able to secure a lower interest rate or more favourable loan terms than borrowers could on their own.
However, it’s important to note that not all mortgage brokers are created equal. Some may have different levels of expertise, access to lenders, and commission structures that can affect the quality of service they provide and the deals they offer. It’s important for borrowers to do their research and choose a reputable, experienced mortgage broker who can help them achieve their goals.
CONS OF USING A MORTGAGE BROKER:
1. No Access to Some Lenders
If you’ve never used a mortgage broker before, you’ll need to establish a relationship with a new one. Although brokers have access to many different mortgage lenders, not all loan providers work with brokers. Instead, they only offer home loans directly. This means that a borrower may not be getting the best loan rate or term because the broker is limited in the lenders he or she works with for funding.
2. Potential Bias
Some mortgage brokers may be incentivized to steer borrowers towards certain lenders or loans that offer them a higher commission. While this is of course, not the case for all brokers, it’s important to do your own research and ensure that you’re getting the best deal for your needs.
Mortgage brokers typically charge a fee for their services, this might be a pre-agreed set fee or could be 1% to 2% of the loan amount. While this fee may be worth it if the broker is able to secure a better deal for you, it’s important to factor this cost into your overall budget.
The bottom line? A good Mortgage Broker really can make the home-buying process much easier. If you don’t personally know one, it’s always worth asking friends or family that you trust to recommend a Broker they have personally used.