When Purchasing a Home, Why Use a Mortgage Broker?

by Enrique "Henry" Saldana (November 2011)

Two years ago, Jeff Smith and his partner, Rachel, decided they wanted to purchase a home in Paradise. Figuring they could only manage the minimum down payment on a home, their first instinct was to approach their own financial institution.

Unfortunately, their 20-year loyalty to the bank counted for zilch—their mortgage application was rejected. So they visited a mortgage broker, who found the lender willing to provide the sum they needed to purchase the home they coveted.

"We just wanted to get into a house, but the bank was saying, 'Look, we're not approving you, unless you provide us with more income information', and the mortgage broker said, 'We'll get you approved, no problem.'"

While mortgage brokers have much to recommend them, the biggest advantage to having a mortgage broker, is the personalized service. With the bank, you may have to endure long, stressful and ultimately fruitless meetings in a daunting institutional environment. The mortgage broker can put you more at ease.  He can tell you your options right off the start.

Mortgage Brokers
Mortgage brokers match borrowers with lenders. They work as “free agents” for multiple different lenders and earn a fee or commission when they sell a mortgage to a bank. Just like talent agents shop aspiring actors to movie studies, mortgage brokers approach different lenders with borrowers’ applications.

Good mortgage brokers should be able to find borrowers the most competitive rates and also find loans for borrowers with less-than-perfect credit.

So shop around and negotiate for your loan just like a home or a car. Don’t blurt out the highest rate you will accept and never be afraid to push for a better deal.

Finding a Mortgage Broker
Many mortgage brokers are independent and work out of small offices or their home. The best way to find a good one is often to ask friends or family for a referral or pick up a local directory.

Another option is to work online. On sites like virtual mortgage brokers, you enter your application and they shop it around, often instantly, to multiple lenders.

Shop, shop, shop. Before signing on the dotted line, investigate at least two of the three options above: a local bank or credit union, a mortgage broker, or an online broker. As you shop, try to compare apples-to-apples. Ideally you should be able to compare loans that are for the same term and the same amount with the same down payment.

Then, get a detailed breakdown of rates, points, fees and total closing costs.

Finally, even if you have never checked your own credit before, now is the time to get a free copy of your credit, print out your report and send it to, or take it to, your first meeting with a bank officer or broker. They should be able to give you a rough idea of what kinds of loans you’ll be approved for before they do a hard inquiry on your credit report.

And remember, there is no such thing as luck. “Luck is the point where Preparation and Opportunity Intersect.”

So, when the right real estate opportunity comes, be prepared!

Preparation in this case means, getting Pre-approved for a Mortgage Loan!

This report courtesy of Enrique (Henry) Saldana-Mexico Realty Solutions  www.mexicorealtysolutions.com;
moneylendingbus@hotmail.com; Tel: (984) 147-2388 - Cel: (984) 111-8743.


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