In the past, when a home owner's mortgage came up for renewal, they simply went back to the bank holding the mortgage and signed a new agreement. First-time home buyers went to the bank they normally dealt with to apply for a mortgage. All that has changed over the last several years; consumers are much more likely to shop around to get the best possible interest rate. More and more of them are choosing to go to a real estate mortgage broker for assistance.
What is a Real Estate Mortgage Broker?
A real estate mortgage broker is a person who acts as the middleman between the person wanting to arrange the mortgage and the lending institution. The broker has the ability to work with multiple lenders, which means they may be able to find a better interest rate than the one offered by a bank. A real estate mortgage broker may also be able to arrange financing for someone who would otherwise have trouble getting a loan (bad credit, self-employed, gaps in employment history).
Finding a Real Estate Mortgage Broker
One of the best ways to find a broker is to ask friends, family members, and co-workers if they can recommend someone. A reputable broker will want to make sure his or her clients are satisfied with the service provided. It's a good idea to call your local Better Business Bureau to find out if there are any complaints on record against the broker.
Another way to find a real estate mortgage broker is to contact a realtor and ask if they know of anyone. The Real Estate Board serving your area may also have a list of local mortgage brokers. Listings for mortgage brokers can be found in the Yellow Pages or online.
Once you find a few mortgage brokers, contact them to find out how many lenders they work with. (You will want to find a broker who works with a large number of lenders.) This information may be included on the broker's website.
Mortgage Broker Fees
An important consideration when looking for a mortgage broker is how the broker is paid. In some cases, they charge the borrower an up-front origination fee (usually a percentage of the amount borrowed). The fee may also be added to the loan; this means that the borrower will need to add this amount to the loan and pay interest on it as well. The mortgage broker will also charge a fee to the lender.
Including the mortgage broker's fees with the amount borrowed may be a good choice for first-time buyers who don't have extra cash to pay up front or those who want to refinance their home to improve cash flow.
Who Needs a Mortgage Broker?
Working with a mortgage broker is a good choice for those people who want to ensure that they are getting the best possible rate. People who have been turned down by their bank may also be able to arrange mortgage financing with an alternate lender. With a financial commitment of this size, it's a good idea to shop around and consider the options before you sign a mortgage agreement.