You may wonder whether or not you should work with a mortgage broker. There are advantages and disadvantages to working with a broker, just as there are advantages and disadvantages to applying directly with the bank or lender.
Advantages
Mortgage brokers offer several advantages to borrowers looking for mortgage financing.
One Stop
A mortgage broker can help almost any borrower find a mortgage. Brokers work with numerous banks, lenders and mortgage companies. You can apply for a mortgage with a broker and they can shop and compare the mortgage options available to you so that you don't have to spend a lot of your time talking to different lenders. From pre-approval to closing, a mortgage broker works with you throughout the entire mortgage process.
Know the Business
While you might have to learn about the mortgage business and the lingo lenders use, the mortgage broker already knows the mortgage business. They can act as your guide and teacher. The broker ensures that you understand everything there is that you need to know about the mortgage financing you are establishing.
Variety of Options
Mortgage brokers are not limited to the mortgage programs of one lender. They have relationships with numerous lenders, which means the mortgage options are more diverse than a borrower that is working with one lender. If your personal situation prohibits you from working with one lender, the mortgage broker likely has access to a mortgage program and a lender that matches your personal financial situation.
Disadvantages
Working with a mortgage broker can also have some potential disadvantages.
Lacks Relationship Status
A borrower has the option to apply for a mortgage directly with the bank or lender. When the borrower has an existing relationship with the bank, working through a broker instead of applying directly can be a disadvantage.
The terms and conditions for the borrower can be more beneficial because they already have an existing relationship. The mortgage broker, on the other hand, might not have the relationship you have with the lender, so it doesn't do you any good for the broker to submit the mortgage application on your behalf.
Broker Fee
Mortgage brokers generally work on commission. They receive a fee that is a percentage of the mortgage amount you are financing. If you have to pay this fee, it can be the biggest disadvantage to working with a broker.
Their Relationship Status
The relationships mortgage brokers have with banks and lenders can be both an advantage and a disadvantage to borrowers. While it can make obtaining your mortgage easier for you, it can also be that the broker prefers to place your mortgage with a lender they like doing business with, rather than with the lender that is the best for you. In some cases, it is because the lender pays a higher commission to the broker than other lenders. Some banks and lenders do not work with mortgage brokers, so you are only able to work with these lenders if you apply directly.
To Broker or Not to Broker
Working with a broker offers just as many advantages as going to the bank or lender directly. The decision comes down to your comfort level and knowledge of the mortgage industry. If you feel you can go alone, then do so. If you feel as if you need some professional guidance and advice along the way, then a mortgage broker can provide this for you.
