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Should You Use A Mortgage Broker?

What a mortgage broker does and how to determine if you need one.

A mortgage broker acts as a "middleman" between a borrower and prospective lenders. The mortgage broker compares mortgage deals and negotiates with lenders on behalf of the borrower in return for a flat fee or commission.

While many borrowers are more comfortable using a mortgage broker rather than going through the mortgage process alone, others get along just fine without one.

Do you need to hire a mortgage broker? You could probably benefit from hiring one if:

  1. You aren't very knowledgeable about mortgages and real estate transactions. Good mortgage brokers know the "ins and outs" of the mortgage process and they can lead you step-by-step from start to finish.
  2. You don't feel comfortable negotiating with prospective lenders over mortgage rates, points, etc. A good mortgage broker will negotiate effectively on your behalf and get you the best mortgage deal possible.

    Negotiating your mortgage interest rate down by just one percentage point can result in the savings of thousands of dollars in interest payments over the course of a 30 year mortgage!
  3. You don't have a personal relationship with a banker or mortgage lender. An experienced mortgage broker will know most of the lenders in your local area on a first-name basis, usually leading to a better mortgage deal than you could wrangle on your own.
Hiring a mortgage broker isn't necessary for everyone, but if you think you should use one, here are a few tips:
  1. Look for a mortgage broker that is familiar with the lenders in your area.
  2. Hire an experienced broker who has extensive knowledge of the mortgage process.
  3. Shop around to discover the fees typically charged by mortgage brokers in your area.
  4. Ask for at least three references, one of which is a lender. Follow up with the references and choose the best qualified mortgage broker.

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