Happy Home InsiderThis is it; you’ve found your dream home. It’s in the perfect neighborhood, with great schools, restaurants, and shopping all in close proximity. As if all of those reasons weren’t enough to make you pull the trigger, it’s also an easy commute to and from work- Bingo! Sounds like home. However, if you’re anything like the vast majority of average, working-class Americans, you don’t have the necessary financial resources to purchase your dream home outright and are going to need a mortgage. A mortgage is a loan granted to you a specified interest rate in exchange for the title on your house; once the full balance of the loan is satisfied, the title reverts to you and voila! You own your home.
Let’s pretend, for a moment, that you’re not a real estate mogul; the ins and outs of securing a mortgage, can be pretty complicated, particularly for the layman. Luckily, there are people whose entire livelihood is rooted in dealing with those complexities for you- they’re called mortgage brokers. Mortgage Brokers will get a thorough accounting of your finances, apply for the necessary documentation, approvals, and advise you on the best options available given your situation.
“Wait a minute,” you may be saying at this point, “It sounds like mortgage brokers do exactly what I would have to do anyway when buying a home.” You’re right, they do. Mortgage brokers don’t actually do anything that you wouldn’t normally do when buying a home, however, working with one may prove to be beneficial in the long and short term.
The Pros
Far too many first time homebuyers accept the first mortgage they are quoted by a lender, despite the fact that potential buyers are able to apply for as many mortgage quotes as they’d like without it adversely affecting their credit. The issue is, mortgage applications tend to be an arduous process, as anyone who’s ever applied for a mortgage before can tell you. Applying for mortgage pre-approvals can take ages to do. With a mortgage broker, the legwork is done for you. Additionally, mortgage brokers don’t get paid until you close your loan, so it’s in their best interest to find you the best situation possible when purchasing a home. If you find yourself a good, experienced, mortgage broker they may be able to finagle their way to getting certain lender fees waived as well and are typically easy to get ahold of if you happen to have questions throughout the process.
The Cons
Now, it’s important to weigh the cons as well as the pros when considering whether or not to utilize a mortgage broker in your quest to secure a loan. As we briefly touched on earlier, mortgage brokers don’t do anything that you can’t do yourself. Apart from the small minority of broker-exclusive lenders on, the market, if you have the time to fill out the applications, it isn’t anything you wouldn’t be able to handle. Furthermore, due to the fact that there are some lenders that won’t work with brokers, you may even be able to find yourself a better deal than you would with a mortgage broker. Some mortgage brokers have deals in place with lenders who pay them huge fees to funnel clients through them. While the Dodd-Frank Act made these sorts of practices fewer and further between since it’s passing, these potential conflicts of interest are important to bear in mind while navigating the mortgage hunting landscape.
Ultimately, the choice is yours when it comes to deciding whether or not to use a mortgage broker. If you’re someone with a busy schedule that’s short on free time, perhaps a mortgage broker is the way to go. Conversely, if you’re someone with all the time in the world, and a flexible schedule that would afford you the opportunity to do the necessary legwork, perhaps you’re better off loan shopping by yourself. If you do decide to go with a mortgage broker, make sure you choose one that’s trustworthy and that you do your due diligence prior to enlisting their services.
