Why you Need to Find a Good Mortgage Broker & How!
So, you’ve established that you want to invest in real estate. You’ve picked a market to watch and have scoured over the inventory of that market to find a deal worth investing in.
You’ve prepared your finances and you’re ready to make a deal.
The next thing you need is someone to finance the investment for you — that’s where a mortgage broker comes into play.
The Case Against Banks and Big Non-Bank Lenders
A mortgage broker is different than a bank or a non-bank lender.
Banks usually offer low rates and accommodative servicing services. They also tend to upsell their banking products (like checking and savings accounts), riddle your mailbox with unsolicited advertising, and be rather tight on their lending standards.
Tight lending standards can be difficult to utilize if you’re looking for an investor loan or a fix and flip loan.
Banks try to minimize the amount of risk they lend to, making safer investments to bring in safer returns. For this reason, fixer-uppers and gut rehab homes are not on their list of homes to lend against.
In a similar sense, non-bank lenders can be tough to obtain financing from because they may have favorable terms, even compared to a bank, on a 20% down, owner-occupied, single-family home loan. If you’re looking to obtain unique financing for a unique investment opportunity, you’ll find yourself scouring the market for a lender that can help you.
That lender is a mortgage broker.
The Case for Mortgage Brokers
Mortgage brokers have partnerships with all sorts of lenders, allowing them to accommodate any type of home buyer. Whether you are looking for an owner-occupied loan or an investor loan, mortgage brokers find the best deal for you, the buyer.
This is so important because banks and non-bank loan officers often have other goals in mind than just filling the mortgage needs of a buyer.
In addition to promoting other services, bank and non-bank loan officers tend to have monthly volume goals that incentivize them to promote particular products.
For example, if lenders want to push certain products because they receive more margin for that product in the secondary market, they could increase the loan officer’s commission for closing that type of product.
The result is more money for the lender and the loan officer but, more often than not, the buyer/borrower receives a higher interest rate, is charged more points, and opens themselves up to a barrage of new advertisements in their email inbox and physical mailbox.
A mortgage broker tends to be the opposite.
They are traditionally a small one-to-five-person shop that has relationships with all types of lenders. This gives them the power to see what is available in the market for home financing options.
They have unique insight into what mortgage products are out there, what rate they are competitively selling for, and what price it will cost you to obtain that product and rate.
So, instead of going lender to lender and shopping the market, the mortgage broker is a one-stop shop for your mortgage needs.
Now that you know some competitive differences between banks, non-bank lenders, and mortgage brokers, it’s time to learn how to find a mortgage broker that meets your needs.
How to Find the Mortgage Broker for You:
Who would have thought it was that simple? There is a successful website already established for finding a mortgage broker in your area.
This site is set up by United Wholesale Mortgage in an effort to partner with brokers by giving brokers an online presence in a market that’s increasing its online advertising space.
You can search the site by zip code and find short profiles on different mortgage brokers within a certain radius of said zip code.
This site is unique because it can narrow down your search to someone who does business within two miles of the area you live in or are buying in, making it likely that you have more in common with the broker than may meet the eye.
2. Through Your Realtor
To find a good mortgage broker, you simply have to do the same thing you would for a Christmas gift.
Your Realtor is, no doubt, plugged in to the mortgage scene within the markets they do business in — meaning the market you are in.
They probably have a couple different options for you. I would not be surprised if they had a bank option, non-bank option, and mortgage broker option because they never know what their client may prefer.
Asking also gives you the advantage of the referral — the right amount of time and effort will go into servicing a referral client so that more referrals come the broker’s way.
You will be taken care of, or else it may spell the end for that broker’s referral business.
3. Social Networking Sites
Maybe you do not want to go through the Realtor to avoid your broker and your Realtor having a relationship.
Chances are there is a community of people within your network that has gone through the homebuying process.
Social networking sites like Facebook and LinkedIn allow you to see if anyone you know well had a positive experience with a mortgage broker and obtaining financing.
Generally speaking, people love helping other people. If you are going through the mortgage process for the first time, this can also double as an educational experience. Ask someone you know questions about the process and avoid similar mistakes they made.
Mortgage brokers also have an expansive social media presence. They often have reviews and advertising on these platforms so you can see how they handle themselves within that environment.
4. The Internet/Google
Similar to social networking sites, Google has top algorithms these days that not only suggest mortgage brokers that are within your vicinity but also take into account the reviews they have.
Google will also point you in the direction of websites that can help you find a mortgage broker, like the website at the top of this list.
5. Your Network/Family Members
A mortgage broker is someone who tries to have a big presence within their market. They attend local networking meetings, coach your child’s soccer team, attend the local church, and try to promote their business whenever and wherever they can.
It should not be hard to find one, but what you want is a great one.
Your family members or others in your network are reliable sources of real opinions on mortgage brokers they have worked with.
Use this information to empower yourself in making the smart decision on who to use.
Don’t Underestimate the Value of a Great Mortgage Broker
If you are in the real estate investing world for the long haul, a mortgage broker is not someone you use only once. You want to have such a good experience that you can rely on the same mortgage broker every time.
Whether it is for an owner-occupied loan, an investor loan, or a fix and flip loan, the goal is to have financing ready and waiting so you can make an offer on that next deal.
The more confident you feel in your mortgage broker’s ability, the better.
Now get out there and find yourself a good one!