How to Work with a Mortgage Broker

On the market for a mortgage? If you’re new to the process, or you just don’t have a lot of mortgage knowledge, finding a mortgage on your own might feel daunting. That’s where a mortgage broker can come in handy.

Working with an expert can make your loan process simpler and help you get the best rate possible. If you’ve been wondering how to find a mortgage broker, let’s look at how to work with a mortgage broker and see if that’s right for you.

What Is a Mortgage Broker?

A broker works on your behalf to find the best mortgage lender and mortgage rates for your needs. An individual broker or a brokerage firm does the comparison shopping for you, so you don’t have to spend hours researching and applying for different types of loans. A broker likely also has access to wholesale mortgage lenders, whose rates are lower than retail rates. 

How to Know If a Mortgage Broker Is Right for You

Whether a mortgage broker is right for you depends on your specific situation and goals. A mortgage broker can be very helpful throughout the home-buying process and help you get a better rate. Before you decide to work with a mortgage broker, take a look at your financial situation before taking the leap.

What Are the Advantages of Using a Mortgage Broker?

Sure, you could try to find a mortgage yourself. But if you have little knowledge of mortgages, it might be easier said than done. Working with a mortgage broker, on the other hand, can make the process a lot less complicated. Here’s what a mortgage broker can do for you:

• Advise you on the best loan for you, based on their knowledge of available loans.
• Shop around and compare different loans for you.
• Apply for a variety of loans, rather than going through the process yourself.
• Access to a wholesale mortgage rate.
• If you have a low credit score, they’ll be able to find loan options for your specific situation.

Are There Any Reasons You Shouldn’t Use a Mortgage Broker?

In most cases, using a mortgage broker can be a pretty positive experience. There aren’t a lot of negatives as long as you take the steps to find a qualified, reputable mortgage broker. Otherwise, you could end up with someone who doesn’t pay attention to your needs.

If you’re pretty knowledgeable about the mortgage industry and have the time to research lenders and rates, you probably don’t need to use a mortgage broker. You can save yourself the brokers fee by doing the legwork yourself.

Does It Cost to Use a Mortgage Broker?

In exchange for their services, mortgage brokers charge origination and/or broker fees that you pay when you close on your house. Those fees are usually between 1% and 2% of your total loan and not something you pay separately. You can pay this fee all at once at the closing, or sometimes you can roll the fee into your mortgage loan. 

Is It Better to Get a Mortgage From a Bank or a Broker?

Ultimately, the decision comes down to your preferences and whether you feel you can save time by using a mortgage broker. If you feel you can research loans and options on your own, you may prefer to work directly with a lender.

Mortgage lenders such as banks, credit unions and mortgage companies specialize in making mortgage loans directly to borrowers. Each has its own loans and rates. Because loan programs and qualifying standards vary from one lender to the next, it can be time-consuming for a homebuyer to shop around for rates and different loan options. 

In today’s market, it’s not always clear if you’re working with a mortgage lender or a broker. Don’t be afraid to ask your mortgage company if it’s a lender or a broker. And don’t be afraid to ask if the company or individual is licensed and to research them with the Better Business Bureau, the Consumer Financial Protection Bureau, the National Association of Mortgage Brokers and the NMLS website.

How Do I Find a Mortgage Broker Near Me?

To find a mortgage broker near you, start by getting referrals from a real estate agent or two if you can. Experienced agents, such as those found on HomeLight, can refer you to lenders they’ve worked with in the past.

You can also ask friends or family members who you know have recently bought a house. If they used a broker and were happy with the results, that’s a pretty good sign. Looking for mortgage brokers online can work too, but make sure to check as many reviews as you can find.

When you’re looking for referrals, ask the following questions:

• Did the lender describe the available loans in easily understandable language?
• Did they lock in the rate you were promised?
• Were there any hidden or unexpected fees that weren’t fully disclosed in the initial meeting?
  • If they still have the documents, see if the fees on the loan documents are the same as those originally disclosed on the initial Good Faith Estimate.
• Was the broker or banker responsive and able to deal with problems quickly?

Questions to Ask Potential Brokers

If you decide to work with a mortgage broker, in addition to researching the broker, ask some questions up front so you know what to expect and can get a sense of what working with the broker will be like.

• What is your experience as a mortgage broker?
• Can you provide references?
• How much will you make from the lender on this loan?
• What are the names of some of your top lenders?
• What is your process for working with clients, and what can I expect from you?
• How long does it take you to respond to clients’ messages?
• What can you do for me that another mortgage broker can’t?
• Do you require money up front or simply take your fee at closing?

When you first meet with a broker, take a recent pay stub, your most recent bank statement, a driver’s license or birth certificate, a recent tax return and copies of recent credit card and other loan statements. A broker should ask you up front what you’re looking for, including the type of home, the type of loan, what your budget is and what your credit is. 

Most importantly, when working with a broker, know that you’re the customer. The broker is there to serve your needs and help you. If at any time you don’t feel like you’re getting what you need, walk away.

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