Mortgage loan shopping is no different from grocery shopping – in that you want to have the best options
By: Hitesh Khan/
Whether you’re shopping for groceries or looking for a car, you want options. Mortgage loan shopping is no different. And there’s no better place to find options for a mortgage refinance than with a mortgage broker.
One my favourite blockbuster films is the Fantastic Four, a movie based on the adventures of four superheroes. The quartet’s leader is the genetically altered Mr Fantastic, who can stretch his body like silly putty. Mortgage broker often use powers similar to the costumed crime fighter. They can stretch and shape a mortgage refinance to fit your financial situation.
Here are five reasons that explain the unique superpowers of mortgage brokers to help you with that mortgage loan shopping, along with a word on how to prevent a broker from stretching your refinancing budget past the breaking point.
1. One broker, many lenders. Mortgage brokers can put together a variety of loan packages because they have access to a wide range of lenders, who operate on a wholesale basis, relying on the brokers to find customers. A myriad of lenders operate on this basis, and brokers can choose whichever program fits your mortgage loan shopping needs.
2. Superior access. A wholesale lender works only through brokers. As a result, consumers don’t have access to their special programs or rates. You need to work with a broker if you want access to wholesaler’s unique loans.
3. Stretching that loan package. A broker doesn’t have the constraints that you might find at a bank or credit cooperative in terms of structuring a deal. They can stretch or limit their fees and the terms on the loan. More flexibility on the part of the originator means a more flexible loan for you as you do mortgage loan shopping.
4. The ability to be disloyal. A mortgage broker doesn’t need to be loyal to a vendor. If you’re unhappy with a particular lender or don’t like the package it puts together, the broker has the freedom to look elsewhere. Wholesale lenders understand this, and they do what they can to keep the mortgage broker doing mortgage loan shopping happy.
5. Third party flexibility. The same flexibility brokers have with loans also applies to third-party vendors, like appraisers and conveyancing lawyers. Brokers can shop around until they find the best prices with the best quality work-and they can move very quickly.
For all their flexibility, mortgage lenders do have their downside. Because it’s relatively easy to become a mortgage broker, many don’t have extensive training or knowledge in the industry. They also derive much of their compensation through fees, so you’ll need to ensure you work with brokers from reputable companies. Be sure to ask for references, read reviews and check with the friends and relatives before signing on with one of them.
It is typical for Mortgage brokers partner property agents because they have previously had a good experience working together. Throughout the home buying process communication is key. A mortgage broker and real estate agent who have a good communication system and have worked well together in the past can avoid problems that arise when there’s a breakdown in communication between the two entities.
It’s not a bad idea to work with the mortgage broker your real estate agent partners with. However, you should understand that you have every right to choose any mortgage broker that you would like to work with. Ideally, you should speak to several mortgage brokers and make your own informed decision. That being said, there’s a reason the real estate agent trusts and prefers to work with their mortgage broker partner, and their solid working relationship can benefit the home buyer.
A good Mortgage Broker will ensure that the deal is ready to fund at the closing table on the predetermined closing date. There is no downside to using a (competent) mortgage broker recommended property agents. And it is always a good idea to have a backup plans just in case.
In summary, engaging a mortgage broker can help you save time and money and ease the house buying process of shopping for a home loan.
Besides using a mortgage broker, you should also use a mortgage calculator to estimate the payment on a new mortgage, but it can be used for other purposes, too. Here are some alternative uses for a mortgage calculator.
For starters, you can read up more to have some basic understanding about house buying process or about how a mortgage broker can help you. You may also want to find out about housing refinancing in Singapore.
There is also a significant difference between a fixed-rate mortgage and an adjustable rate mortgage. The former allows a borrower to “lock in” a permanent rate, whereas the interest rate on the latter could go up in the future. Always remember to check with your current lender about repricing — your existing relationship could allow you to realize big savings in terms of both time and money. You should find out more about the differences between fixed and floating rates.
If the broker proves to be established and reputable, let her put her fantastic powers to work to help yo with that mortgage loan shopping. The result should be a refinance that makes a mortgage broker look like a real superhero.