If you’re interested in purchasing a new home, hiring mortgage brokers may be in your best interest. It all depends on your situation and the current market. Mortgage brokers can help you save money in the long run, this may be a great route for you and your family.
What is a mortgage broker?
For anyone unsure about the role of mortgage brokers, they are basically the mediator between the borrower and the lender. You, the borrower, may want a broker on your side to negotiate the best situation possible when purchasing a new home. If you don’t have the time or resources, or you simply don’t like the legal aspects and paperwork of working with a mortgage lender, a broker will be able to assist.
How can they save me money?
A broker is more knowledgeable about different types of mortgages you may qualify for in your unique situation. For example, if you’re a first-time homeowner or a veteran, they may be aware of special discounts or loans that can help you decrease your monthly payments or lower the money you want to put down on your home. They will also help you fill out the expansive paperwork that goes along with these loans.
They may also have access to lenders you would have not known about otherwise, who can provide you the best possible interest rate on the market. Some lenders may only work through mortgage brokers and offer a special rate to those who borrow through this system, so you may end up saving on your monthly payments because of a better rate than you’d get reaching out on your own.
How do they get paid?
Mortgage brokers are paid when you follow through with one of their loan recommendations – usually 1% or 2% of the loan amount, and you can often choose to pay that monthly along with your mortgage payment, or all upfront if you desire. If you’re able to afford it upfront and incur lower monthly payments down the line, that’s a great option. However, you may not ever end up paying them a penny. Many brokers are paid by the loan company instead, as a fee for linking you up with the lender. When shopping for a mortgage broker, ask upfront how they expect to get paid and what that might cost you in the long run vs. how much you’ll save.
Overall, whether you should use a mortgage broker or not depends on your current, unique situation. If you’re looking to purchase a home, consider ways in which a broker can help you save money in the long run. If you’re selling your home, use a seller closing costs calculator and see what you can afford when you’re looking for a mortgage for your next home before reaching out.