A mortgage broker should be your partner in finding a lender to offer you the best loan terms. But, you may not know what separates a good broker from a bad one if you rarely hire one.
In this article, we’ll help you by covering some good rules to follow before you sign on to work with a mortgage broker.
It’s not every day that you need the services of a mortgage broker, so if you haven’t dabbled in real estate at all, you may not know what a mortgage broker is. Let’s first define what they are and what they do.
A mortgage broker hires a prospective homeowner to act as an intermediary between themselves and lenders. If you are not confident that you can negotiate better loan terms for yourself, you may want to hire someone who can be a mortgage broker. So, does that mean you can’t get a mortgage from a lender if you don’t have a mortgage broker working for you? Actually it doesn’t.
However, the knowledge and network of a mortgage broker makes things much more convenient. They help save you time and effort since your potential lenders have lives beyond screening. A mortgage broker can take that work off your hands so you can come back to them and get the best deals and choice of lenders. Now that you know what a mortgage broker does, let’s discuss the dos and don’ts of working with one.
Let’s first cover the ins and outs of working with a mortgage broker
Just because they advertise that they have mortgage brokerage services doesn’t mean you should hire them It’s best to do a little research first. The most important part of working with a mortgage broker is choosing the perfect broker for your needs. According to the Top Brokers Hub website, researching your mortgage broker’s track record can help you a lot. By searching for top brokers in your location, for example, Auckland Mortgage Brokers You can compare companies before making a decision.
As with anything you spend money on, doing your research first will help you avoid dealing with risky businesses. This will not only save you money, but it will also save you time and resources. As part of your research you should take advantage of the free consultation or initial meeting that these brokers offer. This step allows you to gauge their knowledge level, professionalism and whether they align with your financial objectives. Sometimes, it’s a way to get a sense of whether you want to work with them. Since you may be working with them on something as important as mortgage loan terms, you should go through all of these steps to avoid a significant headache in the future.
If you’re heading into that initial meeting with a potential mortgage broker, use that opportunity to ask smart questions. Ideally, they should be relevant to your specific situation. For example, if you’re interested in remortgaging for any reason, it’s best to ask them about it first.
Other questions to ask are:
- Who are their lenders?
- Why do they prefer these lenders over others?
- How to apply for loans through them?
- What are their compensation terms?
These basic questions can tell you whether or not you think they’re worth working with.
Always shop around before settling on a mortgage broker. Typically, mortgage brokers will receive a certain percentage of the loan deal that they helped foster. Consider their years of experience and the terms they can get for you to see if their rates are worthwhile. Sometimes, a more expensive one can give you a hugely favorable loan term than a cheaper broker. Even so, it would be great if you could get a lower percentage cut from the mortgage broker.
It’s important to ask for their credentials during meetings, but it’s also a good idea to look them up yourself whenever possible. After all, a mortgage broker so reliable could always fake it. You can look them up in government registries to make sure they are what they say they are. This is sometimes a simple Google search, so do that step first
If you’re on the receiving end of the negotiation, you want to make sure the mortgage broker can settle the documents and requirements in a timely manner Therefore, once you’ve agreed to work with a mortgage broker, it’s a good idea to ask them about their projected timeline for closing the loan. You don’t want to miss out on a favorable deal because you failed to pass the proper requirements through the mortgage broker in time
Now that you know what, let’s talk about what you are should not Do when you want to work with a mortgage broker.
If you’ve done your research and have an ideal lender or financial institution that you want to get your mortgage loan from, make sure your broker can negotiate with them. Some lenders may have a specific set of mortgage brokers they work with, and you don’t want to sign off with a broker who may not even be able to negotiate with the lender of your choice.
Some tips from mortgage brokers that they can tell you to keep in mind is whether the mortgage broker you want to hire has a conflict of interest when working with a lender. Other mortgage brokers may have an agreement with lenders where they want to get the most from you, so they may recommend a home loan that you can’t afford to pay off in the long run. You want to make sure you have a clear financial understanding of your ability to avoid this broker.
Sometimes, you don’t want to work with a mortgage broker because they treat you like another number in their client base rather than a human being. A home is a major purchase, and a mortgage is a long-term and significant financial burden on you. If you feel that your mortgage broker is not paying enough attention to your needs and understanding your financial capabilities, there is no harm in choosing not to work with them.
There should be regulations that protect you as a client from mortgage brokers cutting deals with lenders. However, there may still be some conflicts of interest that cause them not to give you the best value, whether they do it consciously or not. That’s why you shouldn’t worry too much about shopping around first and finding the right mortgage broker.
Knowing these dos and don’ts when working with mortgage brokers will help you prepare to screen these brokers until you find one that will be a pleasure to work with throughout the process. Thus, make sure you don’t compromise, take your time and use this article to guide your mortgage broker-hunting process.