Mortgage Brokers: What Are The Pros And Cons

Mortgage brokers always seem to have their fingers on the pulse of the housing market. They’re connected with more lenders than you even knew existed and they appear to be able to navigate the rules better than financial institution representatives. When you sit down with a mortgage broker, it really feels like they know their stuff.

But are mortgage brokers really as great as they seem? Is there a downside to choosing a mortgage broker over your tried and true financial institution? Are there risks involved?

Today, we’re going to take a look at the pros and cons of choosing a mortgage broker over your regular financial institution so you can decide what the right choice for you is.

Mortgage Broker Cons

• Just going with the first mortgage broker you meet doesn’t automatically guarantee you’ll get the best financing suited for your needs. Mortgage brokers compare multiple lenders for you, but they may not check them all – it is possible you could find a better deal with another mortgage broker. It pays to shop around to find the best mortgage broker for your needs.
• You won’t have all your financial products in one place as you may have before. Now, you’re going to have to pay attention to multiple accounts at different institutions.
• Using a mortgage broker means you probably won’t be able to leverage any relationship you’ve built with your financial institution, even though your institution will likely not give you their best rate up front.

Mortgage Broker Pros

• Mortgage brokers aren’t going to charge you anything, as they get paid via commission from the lender.
• Mortgage brokers understand what it takes to get approved and can work the system for borrowers who may not have the best credit.
• Mortgage brokers can act as a guide through the complicated and stressful process of securing financing for a home. This can be a real life saver if you’re first time buying a home and you don’t know much about the mortgage process.
• With a mortgage broker, you’re always going to be dealing with the same person, whether you call in to ask a question or go into their office to talk.
• Mortgage brokers connect with all sorts of lenders, even lenders you had no idea existed. Possibilities seem to open up when you use a mortgage broker.
• A mortgage broker can’t try to upsell you, because they're not selling their own products, nor do they sell anything other than mortgages.
• Mortgage brokers can often grab better rates for borrowers when their mortgages are renewed.

Using a mortgage broker also means you avoid the one biggest mistake that many people buying a home for the first time, or renewing their mortgage make - getting your mortgage at the same place you bank, or renewing your mortgage without shopping around. Although it is convenient and easy, and you’ll probably get the same great customer service you’ve come to appreciate over the years and your mortgage application process is going to be relatively painless, the problem is that there could be a vastly less expensive option out there for you that you’re passing up. While it is absolutely fine to go to your own financial institution to apply for, or renew, your mortgage, the biggest mistake you could possibly make, is not getting more options from other mortgage providers and brokers. The more options you get, the more money you’re going to save. The more places you look, the more likely it is you’ll find a great deal. Some mortgage providers can offer you lower rates, and some can offer you cash back incentives. Some lenders have significantly lower closing fees than all the others. Evaluating the total cost of each lender and weighing the pros and cons before you choose your mortgage provider is going to ensure you’re paying out the least amount of your hard-earned money as possible.

Shockingly, nearly half of all borrowers do not shop around for their mortgages when it’s the single most important thing that can bring down the cost of your mortgage, after having a great credit score. Get out there, meet lenders, hear their offers, and communicate these offers to other lenders. A little healthy competition for your money is not unheard of and can result in your dream home with a great mortgage.

So, while it’s nice to maintain the friendly, first-name-basis relationship with the institution you bank with, nice doesn’t add up to actual cash. Being a savvy buyer will. Always shop around for your mortgage.

As you can see, there are quite a few more pros for hiring a mortgage broker, but that still doesn’t necessarily mean it’s the right choice for you. As with most cases, your choice is going to depend on your specific circumstances. If you do decide to make use of a mortgage broker, ensure you still look out for the best one for your needs. You never know where the right mortgage for you is going to be found.

************************

Do you know how high your credit score should be in order to get approved for a mortgage? Check out this post to find out! What can you do if your score isn't high enough? Refresh Financial has a cash secured loan which is one of the best ways to increase your credit score!