5 Tips to Finding a Good Mortgage Broker

Getting a home loan these days is not for the faint of heart. Mortgage interest rates have more than doubled from the salad days of 3% back in 2021, and as of this writing, we're sitting at an average rate of 6.78% for a 30-year fixed-rate loan (per Freddie Mac). On top of the higher rates, you have so many options to choose from when it comes to mortgage types and even mortgage terms. And that's not even considering how many mortgage lenders are out there. How are you supposed to know which is right for you?

Maybe you should hire a mortgage broker. Let's take a closer look at how these home loan professionals operate, as well as a few tips to find the right one for you.

What is a mortgage broker?

Simply put, a mortgage broker works with home buyers on getting a new mortgage, or current homeowners who want to refinance their existing mortgage. This means they'll get the appropriate financial documents from you (your income documentation, identification, bank statements showing your assets, and anything else you might need to apply for a mortgage) first. Then they'll be able to match you up with mortgage lenders offering home loans and rates that are favorable to you as a borrower.

This can take a lot of the guesswork out of deciding which lenders to apply with, especially if you have a less common financial situation, such as being self-employed, or you're too busy to research your options yourself. Mortgage brokers can either be paid by the lender you end up getting your loan from, or by you directly. They're required to disclose their fees upfront so there won't be any surprises.

How do you find one?

A good mortgage broker can be an asset to a buyer. Here's how to find one.

1. Get ready ahead of time

To lay the initial groundwork, it's a good idea to get your ducks in a row first, so to speak. Pull your credit report to see how things are looking (and see if there's anything you'll need to explain to a mortgage lender in the process of getting approved). Collect bank statements and perhaps tax returns, if you're self-employed. Once you have everything together, it'll be much easier to pass it all off to your mortgage broker when you get one.

2. Ask for personal recommendations

If you know people who used a mortgage broker to buy a home or refinance, ask them for recommendations. This can be a great way to get more information about a broker's personality and how easy they were to work with.

3. Look online, too

Online reviews can also be a good way to get more information about a broker you might be considering. Look for reviews that mention a broker's communication as well as how long it took to get the transaction completed. Oh, and while you're at it, plug broker names into the Nationwide Multistate Licensing System database to ensure they're legit and allowed to work in your state.

4. Ask your real estate agent

If you're already working with a real estate agent in your home search (even though it's a better idea to get your financial needs addressed first, as it'll make you a more competitive buyer), you can ask them for recommendations. Real estate agents have a vested interest in ensuring a buyer finds a home and the loan goes through, so they do have a vested interest in setting you up with a good broker.

5. Be prepared with a list of questions

Once you've got a solid candidate, ask them a few questions to assess whether they're a fit.

• Do you work with the loan types I'm considering? For example, if you're hoping to buy with a VA loan, don't hire a broker who is unfamiliar with them.
• Which lenders do you work with? You may already have an idea of which lenders appeal to you, so choose a broker who works with them.
• What are your fees and who pays them? If your prospective broker is paid by the lender, it might be an incentive for them to steer you toward the one that pays them the most.

A mortgage broker can make the home-buying process easier. Use these tips to find the right one for you, if you decide to go this route.