Why Use A Mortgage Broker?
Mortgage brokers, mortgage lenders, bank originators and credit unions all have a place in the housing marketplace.
Together, they give mortgage consumers lots of room to shop around, not just for the best rates and terms, but also for the type of service that comes with obtaining a mortgage.
What mortgage source is best for you depends on your personal and financial needs.
This week, we are taking a look at the benefits of shopping with mortgage brokers, based on information from their trade group, National Association of Mortgage Brokers.
NAMB isn’t going to cheer other mortgage sources. They aren’t going to advocate for the competition. That’s business.
So take their advice with a grain of salt. Do consider other mortgage sources when you shop for financing for what’s likely the largest purchase you’ll ever complete.
First, mortgage brokers are not the source of the mortgage.
They are much like middlemen who shop around for you, but they do have to look out for your best interests to make sure you don’t get ripped off.
Selection – Because brokers don’t originate the mortgage, but do shop around many sources, mortgage brokers have more options than a single source’s in-house loans.
That can be a good thing, because mortgage bankers can and do shop more than a single source. Reputable brokers are well versed in shopping around to get the best interest rate and terms for which their client qualifies.
Effective brokers can also get special rates from lenders they’ve worked with extensively over time. That can result in lower rates. Some brokers also have access to loans with wholesale pricing that individual borrowers can’t access.
Time savings – Letting the broker do the walking saves you time from shopping, calling and researching. A broker can also help weed through the terms of each lender, steering clients away from those who have confusing payment terms buried in their contracts.
By law, fees and terms of a contract with a mortgage broker must be completely transparent, with full disclosure of the rate at which the broker will receive. That’s because they weren’t always so transparent, according to a big chunk of mortgage reform rules effective January 2013.
That’s true of all mortgages, no matter the source – banks, credit unions, mortgage banks etc. with minor exceptions, according to the Consumer Financial Protection Bureau and its new mortgage reform rules effective January 2013
Many mortgage brokers go beyond the mortgage search and do more to simplify the process and offer advice on mortgages.
“Brokers look to build a relationship with their clients and offer assistance where it is needed,” says Don Frommeyer, NAMB president.
“Whether it is helping with basic understanding of credit or acting as a helping hand throughout the entire mortgage process, brokers tend to be more helpful than the banks,” he added.
Again, all sources of mortgage loans have their pros and cons. Banks work well with long time customers, mortgage banks are mortgage banks only and concentrate on mortgages and credit unions, which require membership, can often beat bank rates, but offer services like banks.
Don’t be taken by one industry sector. Shop for a mortgage in a manner that best suits you to get the kind of mortgage you need.