A necessary, early action when preparing to enter the property market is finding a good mortgage broker or bank loan officer to help guide you through the buying process.
A mortgage broker usually works independently under a franchise arrangement. They offer loans from a relatively wide selection of lenders and will work with you to make sure you choose the loan that best suits your circumstances.
A loan officer has access to all the loans offered by their employer. While this might not be as exhaustive a list of options, you’ll receive solid advice on what it will take to be granted a mortgage with their institution.
Most Americans choose to go with a mortgage broker, with some 69.5% of all residential mortgages arranged by brokers in the first 12 weeks of 2022, according to industry researcher CoreLogic.
There are around 17,000 brokers nationally and broking has a market size of $21 billion, so it’s a significant part of the real estate process.
The biggest mortgage provider by some distance is Rocket Mortgage, which issued 1.2 million loans with a value of $340 million in 2021.
When looking to work with either a loan officer or mortgage broker, these tips will help get you started.
Compare
Don’t be afraid to shop around. You want a broker or loan officer who is in your corner and will take the time to explain the intricacies of the mortgage market.
Know the numbers
You’ll need to share your financial situation. They’ll track and verify your income and conduct a credit check with your permission as part of any pre-approval process.
Personal service
A broker or loan officer should offer you the most suitable product for your situation. The cheapest mortgage isn’t always the best one. Some folks want a no-fee early exit clause so they have the option to move banks or pay off their loan early. Each product has its own rules.
The costs
Quiz them about closing costs, which buyers frequently neglect. There will be bank fees and taxes, and a broker or loan officer should help you understand and prepare for these.
Interest rates
With interest rates moving around this year, you should be able to call and find out how these changes affect your situation at any given time. The changes in mortgage costs will affect your budget and, perhaps, the property you can afford.
Ask questions
Tap all their industry knowledge. If you’re a first-time buyer, a loan officer or broker should be able to explain the various state and federal incentives to help you enter the market.