Mortgage brokers play a vital role in buying properties. The process of buying will not flow smoothly without the intervention of a mortgage broker.
Buying a new home is not like buying a car. It is a complex process that requires an expert to deal with the legalities and documents. Properties differ in so many ways like the style, school district, amenities, and of course the location.
The hardest and the most complicated part in buying a home particularly if you do not have experience is the application process. This is the part where you need the help of a mortgage advisor.
So, what are the functions of a mortgage broker? Let’s find out below:
Roles of a Mortgage Broker
- A mortgage broker is the middleman between the borrower and the lender and he is the one who deals with the time-consuming process of getting a loan and compiling the needed documents.
- The broker is responsible for gathering the credit reports, employment history, and bank statements for borrowers buying or refinancing a property.
- The mortgage broker can anticipate issues which might surface while processing the application.
- An experienced broker can determine which issues are hard to handle.
Why Some Buyers Prefer Not to Use the Mortgage Broker Service
If you are well-versed in the process of buying a property, then maybe you can handle the transaction on your own. Some home buyers have the experience and knowledge on how to secure a bank loan so they decided to do it on their own. But it is still best to talk with a broker so you will understand all their options when it comes to the type of loan and the rate.
The mortgage brokers normally have contacts with the best property attorneys. They work with underwriters, title companies, and others until the completion of the process and the keys are handed to you.
Some buyers avoid mortgage brokers to save some money. House buyers know that the services of a broker are not free and they will be the one to pay. But the lender will give the commission to the broker once the deal is completed, which is usually 1 to 2% of the total loan. You are required to pay the loan origination fee, to the broker.
As the buyer, you have the option to either rolled the fee into the loan amount or choose to pay it separately. Most of the time it is being waived and served as an incentive to borrowers.
When hiring a mortgage broker, you need to be diligent. Some brokers may close several loans. Thus, it could compromise service and ethics to complete each deal. Also, the broker cannot control the amount of loan that you can get, it’s the bank that will decide.
What to Look for When Choosing a Mortgage Broker
As a property buyer and borrower, you don’t just choose the first name the search engine provided when you search for a mortgage broker. Some things that you need to keep in mind when searching are as follows:
When choosing a broker, you should ask your friends, colleagues, and family members if they know someone and checks the broker’s references.
- Make sure the broker has passed the national exam and the state exam.
- Ask the broker about the type of lenders they handle. If they work with AAA-rated lenders, secondary market lenders like GNMA and FNMA, and local credit unions, these are the signs that they are a good match.
- Check if the broker has professional liability insurance.
Why Liability Insurance Is Essential?
Mortgage brokers that have been operating for many years usually have professional liability insurance. This will protect them from claims of negligence as they perform their task during the processing of a loan. Mishandling the borrower’s documents is one of the common allegations they receive. Some accusations include failing to protect a borrower’s information and discriminating a potential client.
Also, mortgage brokers can be subjected to lawsuits due to errors committed by a real estate agent while closing the deal. Although the mortgage broker is not liable, the insurance can provide the coverage for the defense costs.
Regardless of whether you are knowledgeable about the process of getting a loan and buying a property, it is still best to hire the services of a mortgage broker to provide you with expert mortgage advice.