If you don’t fit the standard model of a home buyer, you might find it difficult to get the best deal on a mortgage. If you are self-employed it can be difficult to get any kind of mortgage deal at all.
This is where a mortgage broker can come in. Mortgage brokers are experts in scouring the market and finding the best deal for a particular financial situation.
If you are thinking of buying or refinancing a home and have a need for a mortgage, you may have several options. You may be in a position to shop around and contact the lenders of your choice directly. Alternatively, you can go to a mortgage broker, who will work with you to find a lender and who will assist you with the application process.
So if you want or need to go down the broker route, how do you find one and what should you look out for?
What is a mortgage broker?
The first thing you should do before pursuing a mortgage broker is to understand what it is and what his job description is.
Mortgage brokers are licensed professionals who can work with multiple lenders to find, at least in theory, the best mortgages for their clients.
Mortgage brokers act as an intermediary between financial institutions that offer real estate secured loans and individuals who want to buy real estate but need a loan. A broker works with both borrowers and lenders to approve loans for borrowers. They also collect and verify all the necessary documents that the lender requires from the borrower to complete the home purchase, and a mortgage broker typically works with many lenders and can offer borrowers a variety of loan options.
Ask for referrals
If you use an estate agent, they should be able to refer you to one or more mortgage lenders in your area. Family, friends, neighbours, and business acquaintances who have recently used the broker can also be good sources of recommendations.
The advantage of asking locally is reliability. Everyone involved in the process, the seller, the estate agent, the mortgage broker, and you as a buyer, want the loan to be completed on time. Local brokers and lenders have a good or bad reputation for completing loans, so you will have enough information at your disposal. If the loan closing has to be extended for a week and then extended again and again, there can be a lot of stress and uncertainty.
Online research
Besides looking for local referrals, you can conduct research on Google and check out reviews or complaints about the mortgage broker’s ability to get the job done. You should examine and, after research, you should have answers to your questions, such as: how long did it take for the buyer’s loan to be approved? If there were some problems, how long did it take the mortgage broker to solve them? Moreover, you should read and find information on brokers’ communication, organizational, and problem-solving skills.
Questions to ask
Just like you can buy a mortgage, you can look around for a broker. If you are not satisfied with the first one, try another one. If this is the first time you are interviewing a broker, here are some questions to determine if they are the right person for you. Here are some that can help you start:
- How many lenders do you deal with?
- Do you have clients with mortgage needs like mine?
- If you are self-employed ask about their experience of securing mortgages for self-employed people in circumstances like your own.
- How much do you think you can save?
- What do you charge, and who pays for those things?
- What is the normal process, and how long does it usually take?
After you finish the interview, you should visit a few websites and make sure the rates the broker is offering are competitive in the current market. It is wise to look around when comparing mortgage providers; the same goes for brokers. After research, narrow the list down to at least three candidates.
Mortgage broker fees
It’s common for a broker to get a commission from the lender after arranging a mortgage. They may also charge a fee that is a flat amount or a percentage of the amount you want to borrow. All mortgage brokers must clearly state these fees, and any fees or commissions they receive from the lender, before entering into any agreement to act on your behalf.
The mortgage broker connects you with the ultimate lender, and that is why you should make sure that the person you are working with has your best interests in mind throughout the process. Preparing your finances ahead of time, good research, and a wise choice of a broker can ease the job of buying a dream home.