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Is a Mortgage Broker Really Necessary?


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TERMINOLOGY

Many potential homeowners wonder if using a mortgage broker is really necessary. The short answer to that question is no, not necessarily. You could get by without ever dealing with one. However, the benefits that you may receive from using a mortgage broker can outweigh the disadvantages. If you are wondering whether or not you should go with a mortgage broker, here are a few things to consider. 

Connections

The biggest advantage of using a mortgage broker is that they have many connections. They have multiple lending resources. This means that you will have an increased number of options if you use a broker. You can find better rates on potential mortgages and maybe even lower closing costs. If you have bad credit, using a mortgage broker can be very helpful. You might not be approved by a bank or credit union because of your credit score. However, mortgage brokers have access to the subprime lending market, as well. They can find a mortgage for you that you can get approved for. 

Using a mortgage broker will also give you an expert in the industry to help you. If you have ever tried to understand something in the mortgage market and it just did not make sense, a mortgage broker can help. They can walk you through the process and help you understand what you need. 

Drawbacks of Mortgage Brokers

While it can be beneficial to use a mortgage broker in some cases, it is not always in your best interest. If you need to get approved quickly so that you can buy a piece of property, a bank or credit union will usually be faster. Mortgage brokers are basically middlemen and it can take them an extra week or so to get everything in order for you. 

Another drawback to using a mortgage broker is that they make all of their money upfront. Therefore, added in with the closing costs, their fee could be high. You will have to weigh whether or not their fee makes their service worth it for you. That is, if you have real estate experience, you may not need to use them.

Alternatives

If you want to get around using a mortgage broker, there are a few different options that you could use. The most convenient way to get around them is to use a bank or credit union. With a bank or credit union, you will be working with a loan officer for the process. They will have standard methods that they use and the process will typically go a little quicker.

Another option that you have is to shop online for a mortgage. You can basically act as your own mortgage broker and investigate all of the available mortgage programs out there. You can even use sites online that allow lenders to compete over your business. With this type of program, you will usually be able to find a program that fits your needs.