You’re in the market for a new home and realize it’s time to secure a mortgage pre-approval. With a large number of local and national lenders to consider, you like your odds of finding the perfect loan.
But then you realize something: there is a lot of worked involved with the process, which leads you to cut corners.
When this happens, it’s natural to look for help. And that help often comes by way of a mortgage broker.
Here are some of the primary benefits of working with a mortgage broker:
- Saves you time: Forget about doing all the heavy lifting yourself. Your broker will search their network for the best deal, all with your personal and financial requirements in mind.
- Access to more lenders: Some brokers have access to lenders that don’t deal directly with individual buyers. With a larger network to choose from, there’s a better chance of securing a more appealing loan. (more on this below)
- Save on fees: While not always the case, some brokers are skilled at saving customers on fees. For example, your broker may be able to get a lender to waive appraisal fees, origination fees, and application fees.
So, what’s the problem?
Despite the many benefits of working with a mortgage broker, there are some potential disadvantages that could get in your way. These include:
- Conflict of interest: Your primary goal is to secure a mortgage with a competitive rate, and as few fees as possible, from a reputable lender. But not all mortgage brokers care about this. They’re in the business of making money, and the only way they do that is to close a loan. For this reason, they may push you toward a lender and product that’s not best for you.
- Mortgage broker fees: Mortgage brokers get paid in one two ways. By you or by the lender. Don’t consider a broker that you have to pay, as this is money out of your pocket that could be used for something else. Before you do anything, make sure it’s clear that the broker will receive their fee from the lender.
- Not all lenders work with mortgage brokers: Since the Great Recession, many lenders have moved away from working with brokers because they find their loans more likely to default. With this in mind, it may mean your broker isn’t getting you the best deal.
What’s the Verdict?
There is no right or wrong answer to the question of whether you should work with a mortgage broker. It’s a personal decision based on how much time you want to spend on the process, your knowledge, and the level of control you want to maintain.
The best thing you can do is compare the pros and cons of working with a mortgage broker, and then let the information you find guide you.
Final thought : even if you decide to work with a mortgage broker, you are under no obligation to maintain the relationship. If something goes wrong, you can find another broker or take charge of the search on your own.