When you ask people to picture themselves going through the mortgage approval process, odds are better than good that most of them will picture themselves having some form of dealings with a bank. If that sounds familiar to you, then you’d be surprised to know that home-buying hopefuls have an additional option at their disposal in the form of mortgage brokers.
If you want to know if a mortgage broker could be your best path to homeownership, then you’ll definitely want to keep reading.
Aren’t Banks and Mortgage Brokers the Same Thing?
From the outside looking in, banks and mortgage brokers would appear to have a lot in common. They’re both places you can go to secure a mortgage and in both cases you’re working with financial professionals in order to get that mortgage.
However, for the purposes of buying a house, it’s the differences between banks and mortgage brokers that count.
According to Young and Thrifty, “A mortgage broker is a licensed professional who works with a diverse pool of lenders to find you the best mortgage rate.”
In other words, these aren’t the people who lend you money directly. They’re the people who can help you secure a loan.
So without further ado, here are 4 situations where a mortgage broker may be a sensible option for an aspiring homebuyer.
1. Your Credit History is Less Than Stellar
Sometimes in life, bad financial luck happens. One period of joblessness where you relied on credit to get by or old school debts you struggled to pay can have serious long-term effects on your credit score – a number that can play a significant role as a mortgage requirement.
And even after you’ve successfully paid debts down, worked a good job, and put money away for a down payment, these financial skeletons have a way of lingering. An example of this is how negative credit information can stay on your credit report anywhere from 4 to 7 years.
Banks and other more conservative lenders may be reluctant to lend money to someone with a weaker credit score or a history of bankruptcies and being sent to collections. That doesn’t mean they won’t, but they will generally approach applications like that with an element of added caution.
By way of contrast, however, a mortgage broker may be able to find lenders who will be prepared to finance buyers with lower credit scores even in situations where more traditional lenders would tap out.
2. You Want to Find The Best Interest Rate Possible
When you’re making a purchase as big as a house, a lower interest rate can save you thousands of dollars. As such, would-be homeowners have nothing to lose and everything to gain from shopping around and seeing what their options are at lower rates.
3. You’d Like a Professional to Handle Your Application
In any job, you wouldn’t expect someone completely new to a role to perform as well as a seasoned 20-year vet. It’s the same with doing the paperwork required to own a house.
With a mortgage broker, you have an ally in the mortgage application process who can handle the lenders and the application on your behalf so that you never have to second guess yourself. And when your homeowning dreams are riding on your ability to do your paperwork right, there’s something to be said for stepping back and letting a seasoned professional go to work.
4. You Want an Ongoing Relationship With Your Mortgage Professional
The mortgage process doesn’t end when the ink dries. At the end of the day, you’re buying a home because you’re in it for the long haul.
Things might be going well for now, but a job loss or a sudden change in the market could make it necessary for you to make arrangements to defer your mortgage. If the worst-case scenario happens, it pays to have those open lines of communication with a broker who understands your history and has been with you since the beginning.
Sometimes the easiest and most efficient way to navigate a mortgage approval is to work with a professional who knows the process like the back of their hand. To that end, a mortgage broker may be the final piece of the puzzle. Whether you’re constrained by your credit score or you’d just like a bit more support from a professional during your search, working with a mortgage broker is an option to consider.