When people hear mortgage brokers charge a commission of 1 to 2 percent of the home loan amount for their services, they sometimes take a DIY stance when it comes to looking for a mortgage. What they don't realize is a mortgage broker can actually save them quite a bit of money in a couple of different ways.
Steer You Away from Bad Loans
Quite possibly one of the best things a mortgage broker does is protect you from getting a bad loan, and there are plenty of terrible loan options on the market. Some lenders charge absurd interest rates, while others bake a ton of fees into their contracts.
Since the average person is not a mortgage expert, it can be hard for them to determine whether a loan offer is a great deal or a potential nightmare. However, mortgage brokers deal with lenders and their products day in and day out, and that experience can help them quickly point out problems their clients may miss.
For example, a loan may look awesome on the surface because of its low interest rate, but the rate is only that low because it's based on balloon payments that must be made a few years down the road. Suddenly, a loan that was easily affordable when you purchased the home becomes a financial albatross that leaves you scraping by.
Thus, a mortgage broker's experience and expertise is worth the 2 percent commission fee when it can save you from falling victim to a predatory loan that'll siphon thousands of extra dollars from your bank account.
Help Negotiate Fees
Buying a home involves paying a lot of money in fees. Many of these are unavoidable—such as for house inspections and appraisals—but that doesn't mean there's no room to negotiate. Mortgage brokers work with a lot of industry professionals, and sometimes they can get fees reduced or waived, which can save you quite a bit of money on your closing costs.
For instance, lenders typically charge origination fees for their loans that are often equal to up to 1 percent of the mortgage loan amount. A mortgage broker may be able to negotiate with the lender and get them to waive or reduce the fee, which can put that money back in your pocket for use on other things.
If you're shopping for a home, take a moment to meet with a mortgage broker in your area to see how they can make the process of getting a loan easier for you.
To learn more, contact a mortgage broker.