When looking for the right mortgage, a mortgage broker can be invaluable. Sadly, many people end up paying 50 to 100 points (.5 to 1%) more than they should because they don’t choose the right mortgage broker or because they don’t go with a mortgage broker at all. Much like a good real estate agent, mortgage brokers can be worth their weight in gold.
What does a mortgage broker do?
Think of a mortgage broker as a person that has access to hundreds of banks. While it might take the average person weeks to go to that many banks, a mortgage broker can simply pull up the rates on a computer. Additionally, he can find the best loan for you. Once a mortgage broker gets your credit history and a good understanding of what you are looking for in a loan, he can give you the best advice on the right loan for you. This goes for refinances as well.
Furthermore, mortgage brokers get better rates than you do. They are able to secure wholesale rates because of the number of loans they originate. These rates can be anywhere from .5% to 2% lower, depending on your credit rating. For most loans over $100,000, saving .5% would more than pay for the cost of the broker.
How to find the right Mortgage Broker
Mortgage brokers are easier to find than real estate agents because many of them have the same information. The most important piece of information you need from a mortgage broker is how quickly they can close. Typically, you want a mortgage broker who can close in less than 30 days.
Another important factor is the broker’s relationships in the community. You want a broker with access to a good appraiser (who works quickly) and who has worked with a lot of banks. This is important because not all banks can deliver on the rates they promise. There is nothing scarier or more nerve racking than getting to the closing table and not having the funds available from the bank. If you have ever experienced this, you know the feeling. If you have not, imagine how you would feel if your check didn’t come on payday. Having a good mortgage broker can lessen the event of this happening.
How much will a Mortgage Broker Cost?
Typically, mortgage brokers charge about 1% of the loan amount. This can vary based on the type of loan, but should be in the ballpark. While this might seem like a lot, think about all of the interest you would be paying without them.
Good mortgage brokers save you time and money. They can organize your appraisal and they save you the headache of going from bank to bank applying for loans. Before you look for you next loan, look for a mortgage broker first.
