Moving to a new house can be one of the most thrilling experiences; most people spend their entire lives dreaming of moving to a new home. Buying a new home is one of the most significant investments most people make; however, things don’t often go as planned, as a new house could cost you more than you initially planned.
Even if you are saving for a new house, the chances are that you might fall short, which is why many people prefer mortgages for their new home. The mortgage is the money you take from a lender when you buy a new house to ensure your financial stability.
How Mortgages Work
A mortgage is an agreement between you and the lender that if you fail to repay the money you have borrowed, the lender has the right to take your property. The market for home mortgages is a world on its own, and if you are new, then the chances are that you would get overwhelmed pretty quickly by the vast real estate market trends, mortgage terms, rates, and fees.
Why Hire A Mortgage Broker?
All these mortgage complications are incredibly confusing, and many people struggle to find the best loans. So, if you too don’t want to get stuck in such situations, the best thing you could do is find yourself a mortgage broker. Hiring an experienced and competent mortgage broker can make the entire experience extremely smooth.
Mortgage brokers know a lot of lenders and sometimes have access to the ones that you may not even know about. Since mortgage brokers work as an intermediary between the lender and you, they are guaranteed to save you some legwork.
There are also several types of fees involved when you are working with a lender, such as an appraisal fee, application fee, and organization fee. A mortgage broker also helps get the lender to waive all these fees.
Things to Ask
Despite having so many benefits when working with a mortgage broker, many people still get sceptical about whether they need one. This is mainly because they don’t know what questions to ask a mortgage broker. So, let us help you out with a series of questions that you can ask before hiring a mortgage broker and feel more comfortable.
1. Are You a Regulated Broker?
The first thing you must do is check whether your mortgage broker is qualified enough. Different countries have different laws, but most countries require the mortgage broker to be regulated. If your mortgage broker is not regulated, you need to ensure that he belongs to an organization held.
An excellent way to find a regulated mortgage broker is by searching the internet; all you have to do is Google something like “mortgage broker in Bolton” and see a list of mortgage brokers and their essential details.
2. How Do You Get Paid?
Money is a significant concern for people who are finding mortgage lenders because no one would do it if they had enough cash in the first place. So, an important matter for most people could be the broker fee and transparency throughout the loan process, so asking the mortgage broker how they get paid is crucial.
This way, you can also ensure that there are no hidden charges; some laws forbid the brokers to charge an extra fee. Sometimes, when you ask your mortgage broker about their charges, they say they would not charge anything, but they tell you how their commissions work if you press them. Most brokers get a lender commission; this fee is usually about 2-3% of the total loan.
3. What Is The Best Loan for Us?
Since mortgage brokers know all kinds of lenders, they can go to different ones and find the best deals for you; however, a reputable lender would always want to first know about you and then give you some options. Some loan options that the lender could provide your broker include interest-only loans, fixed-rate loans, negative amortization loans, and adjustable-rate loans.
After finding your loan options, you can choose the one that fits your circumstances; one thing you should keep in mind while asking your broker about the loan options is that if he instantly hands you the option without any follow-up question, then it is a red flag. A good broker would always ask you about your financial situation and plans.
4. What is The Response Time?
The real estate business is rapid, and it runs 24/7, which is why you would always want a mortgage broker who is quick to respond. A mortgage broker who doesn’t respond to your calls and emails on time could cost you your future house.
Apart from asking the mortgage broker about their response time, you can also ask other people who have taken services from them. You can also test them in the initial stages of your communication and make an early decision.
5. What will be my Estimated Cost?
A quality mortgage broker always tells you about the estimated costs, including your loans. Mortgage brokers are experienced professionals who pay close attention to all minor details. Getting an estimate would help you make up your mind and be prepared for the future.
However, the key to getting a reasonable estimate from your broker is to provide them with all the necessary information related to yourself. The more information you provide, the more accurate your estimate would be.
6. Do You Offer A Rate Match?
Before making any commitment, you must find a mortgage broker that provides a rate match. Asking a mortgage broker whether they give a rate match is essential because most don’t do it.
Getting a rate match from a mortgage broker would mean getting your money back if you find a lower rate somewhere else.
7. What Is The Current Interest Rate?
Interest rates play a significant role in mortgage loans because the annual percentage rate is derived through complex calculations, and a substantial part of these calculations is the interest rate.
If you are going for the adjustable mortgage, it would not be possible for your broker to calculate the APR; however, you can ask your broker about the interest rate for any other option. After you get an idea about the current interest rate, you can also ask your mortgage broker to lower it and see if he can make any adjustments.
8. Can the Loan Rate Be Locked?
Since we are talking about interest rates, let’s also talk about how unpredictable they are and how much they fluctuate daily. Interest rates move up and down very quickly; however, to ensure that things stay stale, you can ask your mortgage broker whether they can help you lock the loan rate.
Locking the loan rate would also mean that the lender would charge you an extra point; however, it proves helpful. Before locking the loan rate, you must also ensure no additional fee for the lock and always ask for the lock-in in writing.
9. How much is Down payment required?
Down payment is one of the essential things when it comes to mortgages, and usually, the down Payment required initially is around 20%; however, that is not the case sometimes. You can also pay very little down payment, but this usually depends on your lender as well as your mortgage broker.
You can ask your mortgage broker to lower the down payment; however, this approach has various pros and cons. You can also discuss whether your mortgage broker is beneficial for you to go for a lower down payment or not.
10. How Long Will It Take to Get My Loan Approved?
You should always know that there are three levels of loan approval; the first is the pre-approval, followed by conditional endorsement and complete approval. If your mortgage broker is qualified, he will explain all these steps to you in detail and give you a realistic answer. This way, you can also assess your mortgage broker that whether he is the right person for the job.
Since referring to a mortgage broker is the best way to get a good deal on a mortgage, you can ask all these questions to make things even better. Asking all these questions would not only help you clear all your confusions but also allow you to judge your broker and get a better understanding of his work ethic. If your mortgage broker gets annoyed by your questions or gives you half-answers, it would be best to find a new one.