Loans – The Mortgage Broker Process
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Home ownership is one of the last vestiges of adulthood that has more or less stayed the same over the course of time. Unless you have the abundance of capital to purchase the home outright, you will need a home loan to start the path of home ownership. There are a few options available to the borrower in procuring the loan that they need. Using a mortgage broker is one of the more popular ways to do this and we will cover this process in detail below.
The Broker’s Job
To get a good understanding of the process, you must first understand what a Perth mortgage brokerage is and what the broker’s job entails. The mortgage broker’s position in this transaction is to act as a go-between for both the lender who’s offering the loan and the borrower who seeks the capital needed for the home purchase. The mortgage broker has contacts within the industry and is able to facilitate a wide variety of loans through a network of different lenders. This is why borrowers from different credit backgrounds and financial situations are able to get a loan through a mortgage broker that works for their situation. It would not be in the best interest of the mortgage broker to set up a loan that the borrower can’t afford. This would harm the broker’s relationship with the lender if the borrower defaults on the loan.
That being said, there are unscrupulous mortgage brokers out there who are fixated on just getting as many loans as possible. These brokers are concentrated on the quantity of loans provided and not necessarily the quality of loans. These brokers would be satisfied in garnering a multitude of lower commissions and not care if the borrower defaults on half of these loans because these loans are “quick hitters”. Quick hitters are usually one-time transactions with lenders that the broker only does business with seldomly. These types of brokers should be avoided at all costs as they do not have the lender’s interests at heart. Through research and time, borrowers should be able to filter these types of mortgage brokers out of their search.
A decent mortgage broker looks to truly have both the lender and borrower’s interests met in the transaction. These transactions bolster the relationship with the lender and foster repeat business with that particular lender as the broker will most likely have multiple clients looking for a loan. The borrower’s relationship with the broker will also strengthen and the borrower will give the broker the best kind of free publicity, word of mouth to their friends and family.
The Process Of The Loan
The borrower sets up an appointment with the mortgage broker and brings the items needed to start the process. These items include: bank statements, proof of income, collateral (if needed), co-signer’s information (if needed), and information on the real estate in question. The broker will ask pertinent questions to the borrower on what they need loan-wise and what they’re capable of paying per month on the loan. The broker will take the income information and sketch out a preliminary payment plan that the borrower can afford. This will give the broker a base that they can use to cast their net far and wide to find a reputable lender who would be willing to loan the money at those terms.
The broker will find a group of lenders offering different types of loans at different interest rates that fall into what the borrower can afford. Some of these loans may or may not require a down payment from the borrower. The broker will discuss each loan in detail and give the borrower options to consider when deciding which loan to accept. This gives the borrower the perception of choice which is important and vital to the loan process as the borrower will not be encumbered by pressure or picking a loan out that doesn’t work for them. Once the borrower selects the loan that’s best suited for them, the broker contacts the lender and starts the actual process of setting up the loan for the borrower. Once the papers are signed and the down payment (if required) is made, the transaction is completed and the broker will either receive a fee from the borrower or receive a commission from the lender or possibly both at the point of sale in completing the loan for the borrower.