What does a mortgage broker do?
One of the terms you may see at the outset of the home buying or borrowing processes is "mortgage broker," and you might be wondering what exactly they do or how they may affect your ability to buy with confidence.
Wonder no more: This handy guide can help you understand about the role of a mortgage broker so you are better equipped to make the most informed decisions possible as you progress through your home buying journey.
What does a mortgage broker actually do?
A mortgage broker is a professional who can work with you to help find suitable home loan terms.
They will usually sit down with you to get a full understanding of your unique financial situation and what types of loans you might be interested in. Once that's done and the broker has a clearer understanding of what your needs are, they typically inquire with a number of lenders to determine the loans that might be available to you based on those needs and your qualifications, then talk you through the options.
A mortgage broker can recommend home loan products based on what you've said you're looking for.
How can a mortgage broker help me get a home loan?
When you're seeking a home loan, there’s lot of things to consider. Which lender or lenders should you look to? What loan terms should you seek? What makes sense for you?
It's often helpful to get a professional mortgage broker's opinion on the best options available. A broker may be able to look at home loan options you didn't even know were available from a given lender and save you time in the process.
What is the difference between a mortgage broker and lender?
A mortgage broker is a sort of go-between for you and any number of different lenders. Not all brokers work with the same financial institutions and the lender options one professional might provide you, can differ.
When working with a broker, you will often be asked to provide plenty of information. While they will not file a loan application with a lender on your behalf, they can help guide you throughout that process so you can be fully up to speed with what different lenders might want from you.
That, in turn, can help improve your chances of loan approval.
Is it better to get a home loan from a lender?
There is nothing that prevents you from doing all the due diligence that goes into the home loan application process on your own.
However, a broker typically works with lenders on a regular basis, so they'll often be able to provide a broader picture of the options that might be available to you. They can take care of the entire application process for you, organising your documents, speaking to the lender, guiding the process along and acting as your point of contact up to settlement.
The biggest difference between what a broker can do for you versus working directly with a lender on your own is that you may not get the full range of advice and options a mortgage broker can provide you.
When should I see a mortgage broker?
It's generally best practice to go into the meeting with a mortgage broker at some relatively mature point in your home search.
That means you should already have a good idea what you're looking for in a home, what your long-term financial situation looks like and so on. When you do, you can have a more informed conversation with a broker about the kind of home loan that could make the most sense for you.
It may be a good idea to go into this process prepared to ask questions so you can work together with your broker to determine your home loan needs.
Should you use a mortgage broker to refinance your home?
Even if you're someone who has owned their home for some time and has been making steady payments into your home loan, a mortgage broker may be able to help you further should you be considering refinancing your home loan.
In much the same way as such a professional can help first-time borrowers connect with suitable lenders, they can do the same for you if you qualify for better loan terms than what were previously available to you.
You will likely also need to come into the conversation with a full understanding of your short- and long-term financial situation and what your current needs are. A broker can usually provide some help if you're considering refinancing your existing mortgage.
How much does a mortgage broker cost?
Mortgage brokers will usually get paid a flat fee or a commission that is based on the dollar value of the home loan product which is sold. It is often the lender which pays that fee to the broker for selling their product.
Sometimes, you might need to pay a fee directly to the broker and you should try to ascertain all fees well before you put pen to paper on a mortgage agreement.
Do mortgage brokers charge a fee?
Mortgage brokers are paid by lenders for selling their products and so their fees and commissions can vary depending on the home loan. Brokers could be paid a flat fee no matter what loan product they recommend to you, or there may be situations where brokers receive a higher fee if they recommend certain products.
Who pays for the mortgage broker?
The lender usually pays the mortgage broker fees or commission once the mortgage process is completed, but that won't always be the case. For that reason, you should always ask your broker for full information on fees and charges associated with their services.
Once you have that information, this will help you to choose the right mortgage broker that meets your needs.
How can you find a mortgage broker?
The best way to find a mortgage broker is often to simply do your homework.
Don't be afraid to talk to multiple brokers if you feel you need to, and make sure you fully understand what they will do for you, as well as what they may charge. That way, you can proceed with greater confidence.
If you are looking for more information about the mortgage and home buying processes, or how Lenders Mortgage Insurance can help you buy a home sooner, have a look at the "Information for home buyers" section on the Genworth website. Here at Genworth, we are committed to helping you on your home buying journey.