Benefits of a Mortgage Broker vs. a Single Lender

Moshe Farber
18, Jul 2022

If you’re a first-time homebuyer, you may be wondering about the best financing option for one of the biggest investments you will ever make.

You have two options when shopping for a home loan: Broker or Single lender. 

Most people, often on the advice of a real estate agent, simply go to a bank (a single lender). The problem is single lenders like your neighborhood bank do not give you too many options when it comes to rates. A bank will give you a set rate based on their own very specific criteria rather than present you with a custom rate that’s right for you. 

However, a mortgage broker has connections to multiple lenders or banks. Looking at your financial situation, a broker will be able to present you with options from a variety of different lenders in their network and help you select a mortgage that is tailored to your individual needs and best for you financially.  

Find out below why a mortgage broker beats a bank or lender when it comes to home loans.

What Is a Mortgage Broker?

A mortgage broker serves as a middleman who manages loans on behalf of businesses or individuals. They connect mortgage borrowers and lenders without using funds to form the connection. Mortgage brokers collect all essential documents from the borrower and submit them to a potential lender for approval.

Types of Mortgage Lenders

Direct Lenders

These are financial institutions such as banks, credit unions, or mortgage companies that make, process, and fund the loans. Simply put, these are actual companies that handle the loan process and, at the same time, lend you the money.

Mortgage Brokers

A broker, as defined above, is a middleman who helps you look for the best mortgage lender that will suit your needs. They help you find and compare multiple loans so that you will get the best mortgage options out there.

Advantages of Using a Broker vs Lender or a Bank

●       Clients get someone who will work for them while banks work for their shareholders.

●       Mortgage brokers get more access to several loan programs.

●       A broker shops for the best rates and lowest fees.

●       They help you save time by doing all the documentation for you and help you avoid mistakes.

●       If your mortgage application has problems, a broker can help you match with more flexible lenders to help you.

●       Brokers are trusted by lenders, thus making the process much easier because some lenders prefer working with them rather than the homebuyers themselves.

●       If you work for a broker, you will be assisted from day one and all through the closing statement.

●       Brokers are partnered with several banks while a bank will only push you with their one offer.

●       A broker will help you save more money with no hidden costs. They offer loans on a wholesale basis from lenders, giving you the best rates available.

●       Lenders or banks don’t have many loan options. With a brokerage, you can find a match that fits your needs.

●       Brokers disclose what they make on your loan. On the other hand, banks don’t do that and there may be a tendency that you will pay more than you need if you do not shop insistently.

●       Some banks may not approve your loan even if you’re a good candidate for financing. In contrast, a broker can help you with any home loan that matches your financing status.

●       Mortgage brokers help make home applications more convenient because they do all the legwork, whereas with banks and other lenders, you will personally need to go to the bank to check your application. 

How To Find the Right Mortgage Broker

Finding the right mortgage broker is vital, especially if you are a first-time homebuyer. The right mortgage broker can help you traverse the intricacy of finding the home loan that best suits your needs.

Do Some Research

The first thing that you need to do is your homework. Make sure that you do some research on your own about loans to know what type of loan you want. Call as many brokers as you can to compare what each can offer.

Check Their Qualifications

Check their educational attainment and experience. Make sure that the broker is certified and licensed to provide you with a loan. Remember that to be brokers, they should have a certification for it. Ask about their brokerage experience and how long they have been doing their job as brokers. Brokers who have been in the brokerage business for quite some time have more advantages than new ones.

Know How They Get Paid

Brokers have different ways of charging their services. Some brokers get paid through commission directly from the lenders or banks for arranging loans, which might influence the advice a broker might offer you. On the other hand, some brokers will charge you for their services. There are two types of commission a broker can get. One is the upfront commission which is the percentage of the total value of the loan. The other type is a trail commission, a fraction of the mortgage that brokers continue to get over the loan life.

The Right Broker Can Explain Your Options Clearly

When talking to a broker, he or she should be able to explain to you why they are suggesting a specific loan. They should be able to present you with various options and put in plain words how these options will suit your needs. 

Check the Written Assessment

A broker is legally required to follow lending laws; selling you a risky or inappropriate loan will hold them accountable. Your credit assessment must include your financial goals and expectations. Ensure that you have a copy of it and check if everything matches the written assessment. A broker is also required to provide you with a credit guide. A credit guide shows all the broker information and the record of the commission you agreed upon once you go forward with the loan.

Work with Us

As one of the leading brokerages around, ASTAR Home Capital is partnered with over 30 banks and counting, giving you more competitive rates to choose from. A bank or lender will just give you one offer, even if the offer does not fit your needs. An ASTAR mortgage broker, or loan officer, will examine your financial situation, look through our network of banks, and present you with mortgage options that are the best fit for you and your family. 

Getting a home loan can be nerve-racking. With a mortgage broker’s help, you can rest assured that your best interests and financial needs will come first. Working with a mortgage broker will save you lots of time and effort and make your home buying experience a much easier and stress-free one.

Interested in hiring a mortgage broker who will work tirelessly on your behalf to find you the best mortgage for your needs at the best possible rate? Look no further than ASTAR Home Capital. 

Reach out to one of our ASTAR Home Capital mortgage experts today! Email or call 888-ASTAR-11 (888-278-2711) to start the loan application process.

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