You have narrowed down your search to find the house of your dreams, and now you are on the hunt for the best home mortgage to put the keys of your dream house in your hand. One effective way to do it is to work with a good mortgage broker who can help you with the lending process from checking the house, processing the necessary papers to getting the keys to your new home and stepping inside it.
You have probably heard the term mortgage agent or broker from your real estate agent, friends and family who have bought a house. The big question is, what exactly is a mortgage agent or broker, and what is the difference between them and let us say, a loan agent or officer at the bank? In this article, we will talk about the most common questions and answer these questions about mortgage brokers.
To know more about mortgage loans, you can check out https://en.wikipedia.org/wiki/Mortgage_loan for more information.
What is a mortgage broker?
These people act as a middle person between the buyer and the potential lenders. Their job is to work on your behalf with different banks and find the right mortgage lenders that can offer the most competitive interest rates that best suits your needs. These people have a well-developed list of possible lenders that they work with.
If you are looking for your dream home and you do not want to go through the hustle of getting all the requirements and doing all the paperwork, they are the right people to help you and make your life a lot easier. These people are regulated and licensed financial professionals.
Mortgage advisors or brokers do a lot of paperwork, not to mention the legwork they do for their clients – from finding the right home, gathering all the necessary documents from their clients, to pull their credit history and verify their income, as well as their employment history. They can use the information to apply for a loan for their client with different lenders on short notice.
Once they find a lender that suits your needs and settle on a loan, the advisors or brokers will work with the bank’s underwriting department and the closing agent as well as the real estate people keep the transaction run as smoothly as possible.
How do these people get paid?
The lenders usually pay the brokers, but sometimes the borrowers who hire them are the one who ill pays for their services, but never both. Lender-paid compensations pay the brokers from around 0.50% to 2.75% of the amount of the loan. Clients can also choose to pay the brokers themselves.
That is called a Borrower-paid compensation. For example, if you are looking for mortgage advisors in Belfast, you want to ask them what is their lender-paid compensation rate, as well as your borrower-paid compensation rate. These things could have the same rate, but still, you need to do your due diligence and research or shop around.
The competitive as well as the price of the houses, for example, in Belfast, will dictate how the brokers charge. Depending on the place where the real estate is located, it will affect how much these advisors will get every time they close a deal. Big cities, coastal areas, and other housing markets with high-value real estate properties can give brokers a fee for as low as 0.50%.
In another direction, federal law will limit how high these compensations can go. Under Dodd-Frank Act, mortgage brokers is not allowed to make more than three percent in fees and points, according to experts. That restriction was put in the financial regulation law because there are a lot of predatory lending firms that take advantage of this industry, and it caused the housing bubble to burst. Traditionally, it applied to all mortgages that cost more than $100,000, although that threshold has increased due to inflation.
Click here to know more about the Dodd-Frank Act.
Finding the right mortgage advisors or brokers is just like choosing the right lender: it is wise to check at least three advisers and interview them, to know what services they can offer, how much work experience are under their belt and how they can help you simplify the process of owning your dream job. You have to check your area’s professional licensing agencies to make sure that they have the latest broker’s licenses with a good standing.