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Do you need a Mortgage Broker to Find the Lowest Rates?

How a Mortgage Broker Can Help You Find Lower Rates




What is a Mortgage Broker?


A Mortgage broker is a the middlemen who negotiate mortgage financing between a borrower and a lender. Banks and other lending institutions have sold their mortgage products in the years past without using a broker, but as consumers’ needs vary mortgages have become competitive, brokers have become popular in the lending business recently.  A mortgage broker does not handle funds to originate mortgages. They help a borrower connect with lenders that represent the best fit for them in terms of interest rate, down payments, and other financial situations.




Advantages of using a Mortgage Broker


Are you embarking on the home buying process? Consider working with a mortgage broker. You can sort through loan types and rates through the internet yourself, but mortgage loan experts are better options to expedite securing your loan.  Mortgage brokers are the experts who are aware of different lenders, loan types, interest rates for buyers, and they do not have upfront charges.


Often, Mortgage Brokers offer more loans and rate options than a bank. Brokers help create your loan, close your home loan, and they lead you through the mortgage process.  Mortgage brokers offer buyers products of many banks, and secondary markets which allows access to a broad list of products. Brokers know the best places to get the best rates, know how to negotiate for rates and terms, and will give buyers advice on what lender to employ. Good mortgage brokers are experts in anticipating problems and will ensure that you close within a reasonable time, will suggest one lender over another, and find solutions to specific problems.



What does a Broker Do?


Mortgage brokers have a key role in the homebuying process.
1. Brokers have many options for home buying.
2. They work with attorneys, underwriters, real estate agents, and title companies.
3. They help secure the loan and gather the paperwork involved.
4. Compile all necessary paperwork including bank statements, employment history, refinancing reports, and credit reports.
5. Anticipate problems that often surface during the application process.
6. Determine which issued could create difficulties with one lender over another.



Why Do Some Borrowers Stay Away from Mortgage Brokers?


Home buyers often feel comfortable going directly to the bank where they conduct their daily business. This type of relationship is an excellent reason to seek a mortgage from a bank. Meaning, be aware that banks are also hindered by federal rules, and they may not be able to offer satisfactory home buying options.  Some home buyers feel that they will be charged the cost of a broker’s services.


However, the lender pays the commission to the broker at closing. Commissions are usually 1-2% of the amount of the loan. So, there may also a small fee or loan origination fee that is paid by the borrower to the broker. A broker’s fee may be paid separately or included in loan amounts. Often, this fee is waived to give borrowers a reason to use a particular broker’s services.


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How to Find an Ethical Broker?


If you are looking to purchase a home, and you want the best price and terms available, seek out a broker. Find a broker by:
1. Seek referrals from family, colleagues, family, and broker companies.
2. Make sure the broker has passed the national exam and the exam in the state.
3. Ask a broker about the lenders they handle. Brokers who work with AAA-rated lenders, FNMA and GNMA (secondary market lenders), or even your credit union can give you different loan options.
4. Ask if a broker you are investigating, they carry professional liability insurance. Insurance can be an assurance to you that your affairs will be handled professionally.
The NMLS Mortgage Industry Report lists 400,000+ loan originators or brokers who are federally registered. These brokers are certified, ready, and willing to give you valuable service to help you make a substantial purchase for your family.


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