You may have heard someone say “I am working on finding a mortgage broker” or “my mortgage lender is great,” but do not understand what the difference actually is between the two people or companies. You will most likely need a mortgage lender to purchase a house. Mortgage lenders lend you money to finance the house. Mortgage brokers, on the other hand, work to find the best mortgage lender.
Mortgage lenders are financial institutions. They offer and underwrite home loans. They may be part of a bank or separate private financial institution. They set out the guidelines in which you would be approved for a mortgage loan. They look at your credit, income, and other assets to determine the risk in lending you money to purchase a home.
For example, if your credit score is on the lower end while you have a substantial income, they may see that you can afford to pay back your loan in a timely way. If you have a low credit score and very low income, they will most likely deny your loan application.
Mortgage lenders perform a “hard” credit check to verify your creditworthiness. This type of credit check can affect your credit score. Before allowing a mortgage company to check your credit, you should ensure that your credit is in good standing. There are free websites you can use to keep an eye on your credit score.
If you are looking to buy a house, you should get prepared by checking out the lending landscape. Would you prefer working with a credit union, mortgage bankers, correspondent lenders, or a loan officer? If you have a low credit score, you should first and foremost work on increasing the score. Many items can fall off your credit report by simply contesting them. There are many banks that offer free credit score assistance. You can check with your bank institution to see if they offer this service.
It can feel confusing navigating through all the mortgage lender options. They have different policies, interest rates, and types of loans. Mortgage brokers in Brisbane will work to find the best lender for you.
Mortgage brokers are often paid by mortgage lenders. Sometimes they are paid by borrowers. When you are looking for the best mortgage broker, you should ask them how they get paid. Brokers’ fees typically are one to two percent of the loan amount.
Mortgage brokers are licenced professionals that will advocate for you. They work between you and the mortgage lender. Their job is to find the best interest rates to fit your needs. Generally, brokers have different lenders they often work with and are aware of their application processes and interest rates, which works to your benefit.
They will verify your income, pull your credit history, and gather other essential documents from you to determine which lender is your best option. They may suggest that you wait to purchase a home until you can increase your credit score and income. Mortgage brokers are your advocates and work on your behalf to facilitate the lending process.