Maybe you’re
buying your first home or maybe you’re just considering
upgrade residences. Either way, you’re going to
need a mortgage to pay for your new home. Should you
apply at the bank for a loan or should you take advantage
of a mortgage broker’s services? The decision
really depends on a variety of factors, but most important
is your personal preference and needs.
How do mortgage brokers differ from loan officers?
As an employee of a bank or lending company, a bank
loan officer processes loans and mortgages for his or
her employer. The main difference between loan officers
and mortgage brokers is that mortgage brokers are not
employees of a particular lending company; they are
independent or freelance agents. Mortgage brokers can
work with just a few or even hundreds of lending companies
whereas a bank loan officer is an employee of one particular
bank. Though a bank officer may be able to offer a few
different types of mortgages, they all originate from
just one place whereas a mortgage broker works with
tens or even hundreds of companies to get you a good
interest rate and terms for your mortgage. It is a mortgage
broker’s job to bring together borrowers and lenders
– for a fee, of course. A mortgage broker is essentially
a go-between. They do not lend you the money; they find
the people who will lend you money for your new home.
Mortgage brokers do a lot more of the research for
you. They evaluate you as a homebuyer, and taking into
account your credit standing, they decide which lender
will best suit your needs. A mortgage broker submits
the loan application on your behalf and works with you
until it goes through. You can do this research yourself
if you have time, but a mortgage broker has a working
relationship already established with many of these
lending companies and that may result in a better deal
for you. Mortgage brokers secure loads through many
types of investors including investment banks, savings
and loans and even private sources.
Most of the mortgages you may have seen on the Internet
are put there by mortgage brokers. Many in-person or
online mortgage brokers have connections to lenders
in all different parts of the country, which is something
that has its own pros and cons. You may end up getting
a better rate, but an out of Area Company may not have
the necessary knowledge of property in your area or
specific property features and classifications. In the
longer run, this probably won’t be an issue; there
just might be a slight delay in processing your application
until all terms and questions about the property are
answered.
If you’re having trouble securing a loan from
a bank, a mortgage broker may be your best bet. Mortgage
brokers are often able to find a lender for applications
that banks refuse. So there is hope if your local bank
has turned you down – you just need to expand
your search for a lender to online banks or a mortgage
broker.
To prepare for a meeting with a mortgage broker, you
should obtain copies of your credit history. Though
a mortgage broker is able to do this, it will save time
and hassle if you bring these with you to the initial
meeting. The mortgage broker will be able to give you
a much clearer idea of the type of loan and terms he
or she can secure for you if they know what your current
credit situation is.
You do need to remember that mortgage brokers get paid
a fee for the transaction so they are working for their
own interests as well as yours. The higher a rate they
get for the lending company, the more their commission
will be so let them tell you what terms they can obtain
rather than what you’re willing to accept.
Remember that everyone’s needs are different.
Talk to family and friends and see whether they secured
their mortgage through the bank or through a mortgage
broker. Do some investigating to find the best loan
terms and transaction time. Your real estate agent may
also be able to make some useful suggestions or even
refer you to a suitable mortgage broker.
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