The Pros And Cons Of Using A Mortgage Broker
As with all products and services, there are both pros and cons associated with using a mortgage broker. Taking the time to carefully consider both these pros and cons is the best way to determine if these services are right for you. Continue reading to learn more about some of the pros and cons you can expect to experience when using the services of a mortgage broker.
There are several advantages that come with using the services of a mortgage broker. These advantages include:
- Access To More Lenders: Some more lenders only work with mortgage brokers as a way of prescreening applicants. Consequently, choosing to work with a mortgage broker could allow you access to more lenders than if you choose to seek out a mortgage loan on your own.
- Negotiating Power: While the actual terms of your home loan may not be negotiable, many of the fees that are associated with a new loan can be negotiated or even waived completely. Mortgage brokers tend to have more negotiating power than the average person due to the volume of business they do with each lender.
- Less Legwork: Researching the loan terms offered by multiple lenders can involve quite a bit of legwork. Working with a mortgage broker allows you to delegate much of this legwork to your broker allowing you to spend more time house hunting.
There are also some disadvantages that come with using these services. These disadvantages include:
- Broker Fee: While some brokers receive payment in the form of a commission through the lender you choose, others will charge a broker fee. If your mortgage broker charges this type of fee, it could offset any savings you enjoy by negotiating loan fees with your lender.
- Lender Preferences: While you may think that choosing a mortgage broker who works on commission is the better option, this is not always the case. In some cases, brokers who work on commission will have lender preferences due to the amount of commission that each lender offers. This could mean that any recommendations your broker provides are not based solely on your best interest. For many people, it can be difficult to choose between paying their own broker fee and dealing with this type of potential bias.
The Bottom Line
The services of a mortgage broker can be quite beneficial in helping you to find the best mortgage terms and secure lower loan-related fees. However, you may need to pay a fee for these services.
For more information, contact a mortgage broker near you.