Using a mortgage broker to help you finance a new home is still a good option. Here are some national firms you should consider.
If you're thinking of buying a home in the near future, chances are good that you'll need to obtain a mortgage. When doing so, you have two basic options - deal with banks and other lenders directly or hire a mortgage broker to do the hard work. Mortgage brokers aren't as abundant as they once were, but they can still play a big role in the mortgage marketplace. Each family or individual has specific, financial needs that must be considered when shopping for a loan to finance the purchase of a new home. While the nation’s housing crisis has had a devastating impact on the mortgage broker industry, there are still excellent mortgage brokerages serving the needs of homebuyers. Here's what you need to know about mortgage brokers, and whether you should use one.
Simply put, a mortgage broker is a middleman between a homebuyer and mortgage lenders. The mortgage broker will assess the borrower's finances, find appropriate mortgage products, apply for pre-approvals, gather necessary documentation, complete applications and advise clients on the right mortgage products for them. Many people automatically have reservations when it comes to hiring an additional professional to help with their home search - after all, before the process is done, you'll probably pay a real estate agent, home inspector and lawyer, just to name a few. Plus, a mortgage broker really doesn't do anything you're incapable of doing yourself. Mortgage brokers make their money by charging origination and or broker fees, which are paid when the loan is originated (at closing) - they typically fall in the 1% to 2% range per loan.
One advantage of dealing with a mortgage broker as opposed to a bank or finance company is flexibility. Whereas a bank can offer only a limited line of loan products, a mortgage broker can shop among multiple banks and other, alternative lending institutions to match the client with a loan that is most manageable and least cost-prohibitive. This is why some lenders are also licensed as brokers in the various states in which they do business.
While the majority of mortgage brokers are state or even regionally based, there are a handful of brokerages with national scope. If you decide that you want the help of a mortgage broker, there are some leading national providers you will want to consider.
Of the national mortgage brokers that strictly arrange loans for borrowers, New England-based Multi-State Mortgage concentrates on government-backed home loans, including:
- Federal Housing Administration (FHA) loans
- Veterans loans from the Veterans Administration (VA)
- U.S. Department of Agriculture (USDA) rural housing loans
- Federally backed reverse mortgages
The brokerage also deals with FHA’s 203(k) loans. These are loans for a home purchase that may also require substantial repairs or upgrades. The loan is acquired for the amount of the property purchase as well as to cover the anticipated costs for repairs (click herefor more information). Those with good credit and sufficient assets may prefer to seek out conventional financing, but Multi-State is well suited to first-time homebuyers and individuals with damaged credit histories.
Sharpe Mortgage Lending Services
This Atlanta, GA based brokerage specializes in condominium loans. Considering the difficulties of obtaining master insurance policies and up-to-date fees from homeowners associations, Sharpe focuses on forging relationships with condo associations, insurance companies and its 10 wholesale lenders so that loan applications can be smoothly processed and approved.
The National Association of Mortgage Brokers (NAMB) is a voluntary organization of mortgage professionals that serves to educate brokers on legal developments, best practices and ethical considerations. In addition, the NAMB refers prospective homeowners to its members in every state based on the borrower's’ own financial profile and preferences. According to the most recent reporting from NAMB, here are some of the top national mortgage brokers (by volume of mortgages) working in the U.S.:
- Allied Home Mortgage Capital Corp. – Houston, TX
- Mortgage Master – Walpol, MA
- Empire Equity Group, Inc. – Charlotte, NC
- Olympic Funding – Pleasanton, CA
- Nova Finance & Investment/Home Loans – Tucson, AZ
- East-West Mortgage, Co. – McLean, VA
- Academy Mortgage Corp. – Salt Lake City, UT
Because the laws governing mortgage brokers are state-specific, establishing a national presence is a challenge for a mortgage broker. Recent legislation requiring a nationwide standardized test for brokers may, however, affect oversight by individual states.
When evaluating a brokerage, you are well advised to see if it operates with certain niche products. Potential borrowers are also well advised to ask any brokers they are considering doing business with about the total number of banks or lenders they affiliate with. More lenders benefit the customer in terms of flexibility, but are, of course, more costly to the broker in terms of registration fees. The size of its pool of affiliated lenders is also an indicator of how much help it can be to you.
Mortgage brokers should be licensed through the Nationwide Mortgage Licensing System and Registry (NMLS) which has an online consumer service which can allow you to review any serious complaints or disciplinary actions taken against a broker (click herefor more details).
If you like the flexibility that a mortgage broker can offer you when you’re seeking financing for your new home, consider one of these national firms.
There certainly are some valid reasons to consider a mortgage broker, but that doesn't mean you should simply hire one and be done with it. As mentioned, the FICO scoring rules allow you (or your broker) to apply for as many mortgages as you want during a short window of time. Because of this, it's a good idea to at least obtain a few quotes from lenders on your own before deciding to hire a broker. In addition, like any professional you should shop around for a broker that best fits your needs - check references, ask friends and relatives and read reviews.
The point is that you should explore all of your mortgage options before making any sort of decision. After all, a seemingly small difference in mortgage rates can mean thousands in savings over the life of a 30-year mortgage loan.
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