Navigating through a sea of mortgage options can be confusing, particularly for first-time buyers. Because buying property is one of the most costly purchases that you are going to make in your lifetime, it’s vital to compare mortgage options carefully to find the best deal. It’s tempting to simply use your existing bank or a lender recommended by your real estate agent rather than sift through the array of mortgage deals out there on your own. Another option is to work with a professional mortgage broker, who has extensive knowledge of the market. Yet with the cost of buying a house already so high, is it worth your time and money to hire an additional professional to arrange your mortgage? It’s worth looking at the pros and cons in greater depth.
Benefits of Using a Mortgage Broker
One of the major advantages of applying for a mortgage with the assistance of a broker is that they can save you a great deal of time and legwork. If you are applying for a mortgage on your own, you’d need to research all of your options and fill out multiple loan applications. By using a broker, you only need to provide your financial details a single time and they can use this to shop around for the best deal on your behalf. Many brokers are in contact with a wide range of lenders, giving them access to deals you may not find on your own. Some lenders give special rates to brokers that they wouldn’t normally make available to individual clients. This is because brokers bring in a higher volume of business, allowing a lender to offer a bulk discount.
If this is your first time, it can also be advantageous to work with a broker for their professional advice. They know what specific financial records you’ll need to provide. A good broker will be able to explain the various mortgage products available to you, and point out hidden fees you may not notice on your own. Finally, brokers can potentially save you money in the form of lender fees. They may be able to get a lender to waive application, appraisal, or origination fees which can save you even more money.
The Costs of Using a Mortgage Broker
There are many ways that a mortgage broker could potentially save you time and money, but their fees and services can vary considerably. Some brokers charge a fee for their services, while others charge a commission. It’s important to compare these fees carefully to make sure they don’t outweigh the other financial benefits of using a broker. Another potential cost of using a broker is that you may miss out on deals that would only be available to direct customers. Just as some lenders will offer lower rates to brokers, others will offer exclusive products only to direct clients. You’ll want to look at all of these options whether or not you’re working with a broker to find the best rates. Some lenders won’t work with brokers at all, and some brokers will only work with certain lenders.
To ensure that you’re getting the best possible deal on your mortgage, a mortgage broker may be a valuable asset. However, be aware that mortgage brokers differ in terms of their experience, professional alliances, and fee structures. Checking references and asking for guarantees on loan estimates can go a long way towards helping you secure the best possible home loan.