Ravi Chandran
A mortgage broker serves a useful and important function for home owners and investors who are looking for the best home loans
By: Hitesh Khan/
Independent mortgage brokers have had a significant positive impact on the lending industry. Today, the use of a professional mortgage broker is one of the key strategies used by sophisticated borrowers.
What is a Mortgage Broker?
A mortgage broker is an independent real-estate financing professional who specializes in the origination of residential mortgage loans. Mortgage brokers normally pass the actual funding and servicing of loans on to wholesale lending sources. A mortgage broker serves as an independent contractor working with (on average) as many as 20 lenders at any one time. By combining professional expertise with direct access to hundreds of loan products, your broker provides the most efficient way to obtain financing tailored to your specific financial goals.
What Do Mortgage Brokers Do?
In the volatile home-lending market, a mortgage broker serves as a safeguard, offering their clients security, safety, and peace of mind.
One of the broker’s most important functions is escorting your loan application through the entire process, constantly patrolling the component transactions for possible breakdowns. A professional mortgage broker serves by wading through the mountains of rate data and program options, researching current market conditions to find the most accurate and up-to-date information about cost-effective loan options.
Brokers Handle the Details!
There are literally thousands of variables that can affect the outcome of your mortgage transaction. That’s why you need a mortgage broker to act as a liaison between the title and escrow company, real estate agent, lender, appraiser, credit agency, the underwriters, the processors, attorneys, and any other services which may affect your transaction.
A mortgage broker serves also by:
- Discussing and explaining financing program options
- Informing you, in writing, of lock-in options
- Explaining all documents of the loan application
- Explaining all associated costs of the loan application
- Explaining the disbursement of all loan applications
- Explaining the loan process, from application to closing
- Providing you with a good faith estimate of cost and fees
- Communicating with you throughout the loan process in a timely manner
- Coordinating the final closing of your transaction
A crucial component many first time residential buyers forget to consider are the variety of fees and charges that accompany the home purchase price. The additional costs home buyers can be saddled with include property valuation reports, buyer stamp duty fees, property taxes, property agent commissions, and home or fire insurance fees. If you are considering a resale property, you may also have to fork out money for renovation costs. To avoid overspending, home buyers must be careful to not underestimate their budgets.
Make sure that you are clear about how much you would be able to loan and how much your monthly mortgage costs would be. A professional mortgage broker serves you by helping you to not go around to too many lenders. Also be sure to determine whether any restrictions on the loan amounts apply. It would save you a lot of time if you have all this information before you begin visiting potential properties.
Sometimes the home that is the most affordable to you may not be one that is the most convenient and vice versa. Similarly, sometimes you may be caught between a home that is larger and more expensive or smaller and more affordable. Before you make a decision on which home to invest in, carefully consider several factors that will make a difference to you after you make the purchase.
Buying a home is a major commitment and the last thing a buyer would want to do is deciding on a property based on their heart and not their head. It is vital to conduct research into the home you are considering before making a decision and a variety of resources are available to assist you in considering the pros and cons of any given property.
Different properties have different timelines between when you decide on a house to when you complete the purchase. For example, if the property is still under construction, you will be looking at a progressive payment program. Completed properties typically take 12 weeks before the house is yours, from the point you exercise the purchase agreement. A good mortgage broker serves by telling you the almost accurate timeline for the closure.
This type of timeline typically requires the buyer to give 1 per cent option amount in cash on day 1. The buyer then has until day 14 to pay the remaining 4 per cent in cash – this will launch the completion period spanning 10 to 12 weeks. Within two weeks of day 14, buyers will need to pay stamp duties. Finally, two weeks before completion, the buyer would need to make payment for the balance 15 per cent from savings in their Central Provident Fund or cash downpayment.
It is important for first time residential property buyers to set a realistic timeline, be aware of payment milestones and ensure they have enough at each due date to make payment, to avoid unnecessary delays or disappointment.
First time residential property buyers should allocate enough time (minimum 30 minutes) to thoroughly inspect the house and avoid glossing over the inspection process. When the house is carefully and properly inspected, home buyers can potentially save money in the long run since they are better appraised of what they are committing to.
First time residential property buyers should inspect each room and space within the home and keep an eye out for spaces that could be unsafe or harbour costly pest infestations.
