Buying a home in New York, whether for the first time or the last, is an exciting event. Yet before you even take a look at a single home for sale, it is a smart idea to have your mortgage financing lined up. While it is possible to get a home loan directly with your local credit union or bank, the most common mortgage-makers are mortgage brokers. If you are ready to apply for a home loan, here are 4 things you need to know about mortgage brokers before starting the process.
Mortgage brokers act as go-betweens for you and many different potential lenders. Instead of contacting several lenders yourself, comparing mortgage interest rates and filling out multiple home loan applications, a broker will do all of the work for you. They are licensed professionals who will search around within their network of lenders to find the best rates and terms. They save you time by doing things like running your credit report and gathering important documents. They will then file applications for you and hold your hand through the entire loan process. You hire a broker to essentially do all the work of getting you a mortgage.
Each broker has cultivated a network of relationships with mortgage lenders. This could include national banks but it also usually comprises several regional and local lenders. Because of their connections, mortgage brokers can sometimes find special deals, helping to negotiate on your behalf for the best interest rates and lowest fees. Plus, there are plenty of lenders that only make home loans through brokers. Having someone on the inside of the lending world can give you an edge over those who try to find funding on their own.
Your mortgage broker get paid a commission based on the size of your loan. Their payment is called a “loan origination fee” - usually 1% of the mortgage amount and due at closing. It is possible to find brokers who will allow you to roll their fees into the cost of the mortgage so you do not have to pay that large upfront sum out of pocket. The downside, however, is that this arrangement will increase your interest rate and could end up costing you much more over the life of your loan.
When you start your search for a mortgage broker, ask friends, family and associates for referrals. If someone you know has personally had a good experience working with a particular broker, it is likely you also will be pleased with his or her service. It certainly gives you a better shot at success than simply looking up a few random brokers. Be sure to ask in depth questions about any referred brokers – How knowledgeable is he? How quickly does she respond to texts and emails? What did he do to make the process roll smoothly?
You can also get some good suggestions from your real estate agent. He or she will definitely have connections with several mortgage brokers and can recommend the ones who are easiest to work with.
With these 4 pieces of mortgage broker knowledge under your belt, you should be able to score a great deal on your home loan.