The role of a mortgage broker isn’t always clear to some people in the market. If you are buying a home that a current homeowner is selling, real estate agents help you find the properties, and lenders provide the mortgage, what does a broker do? In fact, brokers are heavily involved in the mortgage process if you choose to take advantage of one’s services. Here, we will outline what exactly a broker does and how they can provide you with a better mortgage experience.
Who do brokers work for?
First, let’s sort out who brokers work for. Are they part of a real estate company? Do they work with lenders to help them find clients? Brokers can either work independently or as part of a company, but the main person they work for is you, the client! You are the person a broker wants to keep happy, so they work with your best interests in mind, as opposed to working to secure the best deal for a lender. Brokers represent you in the mortgage world when you make offers to sellers and approach lenders. A broker’s main job is to find you the best product for your individual situation and needs. By making the client happy, brokers hope to make a new repeat customer!
How does a broker help you find the right rate?
You might wonder how a broker can help find the best mortgage for you. After all, they are not you, so how do they know exactly what kind of situation you have? As you work with your broker, they will get to know you very well and gain an understanding of your situation. They can take that knowledge to hunt around for the lender who can offer you the best product based on your circumstances.
Will a broker also help you find the lowest rate? As a broker, I prefer to prioritize the product itself over securing the absolute lowest rate. I think it’s important to have flexibility and support within your mortgage terms, as our lives are always changing. Sometimes, the bare minimum lowest rate doesn’t have the best mortgage terms. Brokers will always work to find a rate that is as low as it can be while still providing you with the terms you need.
How does a broker help you budget?
The role of a mortgage broker also includes helping clients budget for their home purchase or refinance. Buying a home is a huge expense, and especially if it’s your first home, the costs can feel overwhelming to wrangle. A broker can walk you through the costs to expect with this experience. As a professional heavily involved in the industry, a broker can work with you to determine how much the corresponding closing costs and down payment will be when you find a house that meets your needs. They can help you determine what your budget should be if you are unsure, and whether it’s best to save up for a larger down payment, or use a smaller down payment to enter the market more quickly.
What else do brokers help with?
What else does the role of a mortgage broker include? One of the worst parts about any big purchase is the paperwork, which includes buying a home. If you wish you had someone to take that stress off you, a broker is the person for the job. You will have to provide proof of income and employment, and submit an official offer to a seller when you find the right home. Brokers have your back here, either submitting this information for you, or reviewing it with you to ensure it’s completed properly. They make sure everything is organized and will reach the right parties on time so your experience is smooth.
Broker services are often free
One of the biggest questions clients ask is how brokers are paid. Does it come with a high price tag to have this much help and support on your mortgage journey? A broker’s services are often free for the client. Brokers are paid through the lender who ends up providing the mortgage product for the client. Lenders pay brokers something called a finder’s fee in exchange for helping to secure business. Finder’s fees are a standard amount in the industry, so a broker’s pay doesn’t depend on doing business with one particular lender. This means you can be sure a broker is working for you with no other motive.
It’s important to note that in some cases, there is a fee involved when working with a broker. These fees are usually associated with private mortgages or “B” lenders, and not as much with traditional lenders. You can ask a broker about any fees when you meet for a clear picture of their services!
Your next steps
If you think you’re ready to enlist the help of a broker, your first step is to make an appointment. Your first appointment with a broker will be for the two of you to get to know each other and see if you would work well together. You should be ready to provide information on your income, debt, and employment, as well as a preliminary budget for your new home. From there, a broker can get the ball rolling on looking for lenders and guiding you through the process.
Are you ready to contact a broker? Get in touch with me!