What is a mortgage broker?
What is a mortgage broker ? I am looking into mortgage options and do not know what type of brokerage to use. Is it best to go to a mortgage bank or a mortgage company like a brokerage? Thank you in advance. John.
Posted by John Smith
[display_name id=”1″] Hi John, I am a retired independent mortgage broker from Florida. I may be able to clear up this question as I was faced with it on a day to day basis from my clients. In summary a Mortgage broker works as an intermediary between borrower (you) and bank or direct lender. A Bank mortgage consultant works directly for bank. Notice the name and job change.
Bank mortgage consultant only has access to products the banks they represent are offering. This is referred to as “Tied Agent” meaning they can only recommend products that you fit the criteria for within the bank they work for. They do not have direct access to the underwriter (person that will decide if you can borrow or not) which means you have no control over the mortgage application and have a greater chance of being declined based on elements not fitting the bank’s lending criteria. For example not earning enough salary to have size of loan you have requested or not factoring in your bonus or commission which you get on a regular basis, outstanding debts, current account over draft, first time buyer with small deposit, remortgage with low equity, etc. They are simply working as an agent for the bank they are employed by to sell the products that bank is selling. You get biased advice which is not always in your best interest. When I say biased I mean, you may be recommended a mortgage interest rate which is higher than a competitor bank may be lending to borrowers with your circumstance or a direct lender with no shop front.
Mortgage brokers are the experts as they have access to all hundreds of financing outlets and are never limited by the number of financing programs a bank or specialized direct lender may offer. Unlike a bank a mortgage broker has a principle and fiduciary responsibility to you, and the ability to represent you and your needs to countless financial institutions across the country you are based in. This means the broker can search and find institutions and banks that lend to borrowers with bespoke income, debt, commission, ccj , credit history, bad credit file, first time buyer with a small deposit, remortgage with loan equity, etc.
A mortgage broker will propose and recommend mortgage plans that fit your specific bespoke needs. This saves you time and money and gives you peace of mind should you be declined by one lender due to the underwriter feeling you do not fit the lending criteria. The mortgage broker will give you a list of comparisons on the whole of the mortgage market for borrowers with your circumstances and will either advice you to choose a particular lender with the lowest rate or ask you which lender you prefer. The comparisons will be accompanied by illustrations of any incentives the lender is giving you for coming to them and not their competitor. You can instantly approach the other lenders the mortgage broker provided you with illustrations of at the point of the mortgage application should you be declined by one. As your independent and unbiased mortgage consultant mortgage brokers can make lenders compete for your loan. They search the whole of the mortgage market starting with the common big lender names to specialised direct lenders that do not have a shop front and are setup to only deal with mortgage loans, thus incurring a cheaper rate of borrowing interest rate.
The broker is still working alongside the banks and representing their deals, however they do not pay us an hourly rate and in turn can provide us with lower rates of interest and exclusive mortgage deals that they do not offer over the counter. This is an additional strategy banks use to attract the customers that slipped through the marketing campaign net they had setup on TV, Radio etc. Brokers have three fee options for service and arranging your mortgage, but the final decision is with you and based on your personal circumstance.
You can choose not to pay a fee, pay a fee and receive a refund of the commission the lender gives your mortgage broker or pay a lower fee and allow the mortgage broker to keep the commission the lender gives. I hope that helped. Please note the information in this post does not constitute to any form of financial advice. This post is for informative purposes only. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE.
WHAT is A MORTGAGE……………?
I am looking into buying my first house, what is a mortgage???
Posted by M<3Whosoever
[display_name id=”1″] A mortgage is basically a loan allowing you to buy a house. The mortgage is backed/secured by the house/property and if you fail to pay back the mortgage, the lender takes possession of the house/property.If you cannot afford to pay cash for the house, you take out a mortgage.
When will 100% mortgages return?
I can finally afford to get a good mortgage but cant afford the deposit.
Posted by lisadigz
[display_name id=”1″] There are still a few 100% mortgages left in this world. There will always be 100% mortgages. The qualifications will be stricter for the next few years of so.The VA has had 100% mortgages for years and still do today. The qualifications have not changed even with the down turn in the economy. As a matter of fact you do not even need closing cost for a VA loan so the you have to come out of pocket with no funds what so ever.
Now you should have a few funds in the bank for closing cost and about 6-12 months of reserve in the event that something happen you did not plan on. A few lenders require this reserve fund, but might only require 2-3 months of these reserve funds. In order to find out the type of loan programs you are qualified for you will have to fill out a loan application, with a mortgage broker, which you can find one in your local telephone book. Make sure this mortgage broker or mortgage banker is able to do government loans such as FHA and VA loans if you qualify for one.
He will fill out this application, which takes awhile so grab your favorite beverage and sit down. Once you have completed the application, he will run your credit report which will have your credit scores. These credit scores will determine your interest rate. The amount of your monthly debt payments you are required to pay as per your credit report and the amount of mortgage you can take on based on your income will determine the amount of house you will be able to purchase.
When you speak with the mortgage broker you will need the following documents to complete the loan application, there will be others, but this will get you started. #1 One month of pay stubs for each person that will be on the mortgage. #2 Six months bank statements from each bank in which you bank as well as statements from any 401K from you place of employment. #3 Two years of federal income tax along with the W-2 that match. Once he has all that he need to do he can then issue you a pre-approval letter so you can purchase a home. In this pre-approval letter will be the amount of house you are qualified to purchased. Once he gives you this pre-approval you may now find a real estate agent to find yourself a home or he might have a referral.
Now make sure before you get your pre-approval you and your mortgage broker go over all your options as to the mortgage programs you qualify for, the interest rate, monthly payments. If you are getting a FHA, fixed rate, two loans to eliminate PMI like an 80/20 or one loan, if you are qualified for and approved for a 100% loan. You should select the loan that best suit your financial condition at the time. That could be an adjustable rate loan. It could be a fixed rate loan for 5 or 10 years and then adjust. Some adjustable rate mortgages only adjust once. Make sure your mortgage broker explain all your options so you may make an intelligent decision. What might be good for one person might not be good for you, in other words just because your friends and all your real estate buddies are telling you about the great fixed rate they got, your financial situation might call for something else. So select the best option for you and your financial situation. You should also get a Good Faith Estimate (GFE) which will indicate the cost you will have to pay for getting this loan. It will also indicate the amount of your down payment.
Once you have found a home the real estate agent will then prepare a contract for you and the seller to sign. Your mortgage broker will now order an appraisal to show proof of the property value. The mortgage broker might ask for additional information or documentation, don’t get all up tight this is normal, just supply the information or find the documents needed. After the appraisal has been completed you will be called by your mortgage broker to sign your loan docs so you can take possession of your new home. Before signing any loan docs make sure they say exactly what you and your mortgage broker went over when you decided on what mortgage program was best for you. I hope this has been of some use to you, good luck “FIGHT ON”