There is no argument that purchasing a house is an absolutely life-changing experience. However, it can be an extremely complex process with potential buyers considering price, location, amenities, school district, and other factors as part of the decision-making process.
Once a house has been selected, of course, then a pile of paper work must be done to finalize the purchase. There is a lot of paperwork involved, with banking information, loans, credit reports, employment history, and more required before being able to purchase or sell a property. Sometimes, shortcuts are available to help free up time and energy which could be better utilized elsewhere.
What is a Mortgage Broker?
The mortgage broker serves as an intermediary between mortgage lenders and mortgage borrowers, though doesn’t use their own funds or collateral to help finalize a deal. Ideally, the broker will help the borrower secure the best deal from a lender, based on the home buyer’s credit history and other critical factors.
Keep in mind, interest rates from a mortgage broker might not be within your range, some won’t guarantee their estimates, and you might not get the best deal if you were to search around directly for yourself. However, you will still likely save time, paperwork, and fees involved with purchasing a house.
Also, a broker might not find the most lucrative deal for you, so don’t assume that they are going to work directly with you and present the best deals for your situation. So, the responsibility is on you to shop around and speak with different brokers to see which company is able to offer you the best deal possible.
Do You Actually Need a Broker?
This is a rather complicated question with no clear answer. Some buyers choose to work directly with a bank to secure a loan to purchase a house. However, it’s advisable to still speak with a broker to learn about additional options available that might not be clearly made available when speaking with a bank.
A buyer pays a loan origination fee to the broker, though this can be included as part of the total loan amount. However, it’s noteworthy that some lenders only work with mortgage brokers and rely on the intermediary to bring forward suitable applicants. Working with a broker can open up greater access to lenders that choose not to interact directly with the potential home buyer.
If in doubt, ask a real estate agent for referrals to different trusted brokers. Occasionally, real estate companies have in-house brokers they work with, so they can make a quick introduction.
“Look into mortgage rates with your local brokers, rather than just big banks,” said Rock Mortgage, a prominent mortgage broker in Houston. “Big banks have set closing costs and firm interest rates eliminating your ability to negotiate a better deal. Mortgage brokers have access to competitive wholesale interest rates. Always do your due diligence.”
If you’re having trouble finding advertised home loans, then choosing a broker might be a good idea. Buyers with lower credit limits or extenuating circumstances could also greatly benefit by working with a broker.
Real Estate Market in Constant Change
Determining when the best time to sell or purchase a home also can be a difficult decision. It’s important to follow both national and local markets, so you’re able to ideally sell a home when the housing market is booming.
For example, there is a continued mass exodus of tech workers leaving the San Francisco Bay Area. Some of them choose to remain in California, moving to places like Sacramento or further south of San Francisco Bay Area. Currently, there is a high demand for a mortgage broker in Houston and Austin, for example, and they are finding great success in adapting to the California exodus.
The people deciding to relocate can work with the broker to help secure the necessary funds to purchase a house, while also working to sell their house – or leave their lease and head east. The ability to work with a middleman should make it just a tad bit easier to get their affairs in order, removing one less hurdle to cross.
Final Thoughts
The last housing crisis definitely did damage to mortgage brokers, with people receiving loans that they definitely shouldn’t have received in the first place. However, new regulation and added attention to the industry has helped it make a strong comeback, with almost half a million federally-registered mortgage loan companies and private entities currently available.
When it comes to buying or selling a house, make sure to do proper research to maximize the process the best you can. Don’t be afraid to shop around and speak with different brokers, which will help determine which company is able to provide the best deal at the time. Purchasing a home often is an extremely stressful experience, but there are steps possible to make the entire process as smooth as possible.
