When people go to buy a home, more than 9 out of 10 need to do it with a home loan. In fact, with the cost of home prices rising significantly since the 1990s, very few people are able to a buy a home today outright with cash. So, the typical place most people started with tended to be the local bank for a home loan, otherwise known as a mortgage.
However, lending money is a risk for banks, so they want to maximize the profit side and minimize the loss chances. Part of this happens due to the federal government helping underwrite the mortgage process for traditional lending. However, the other aspect applied tends to be filtering of good and bad applicants.
There’s More to Borrowing Than Just a Paycheck
Now, most people assume that just having a good job is enough to be approved for a home loan. In reality, a number of formulas apply which rate a candidate based on multiple factors. Income is a big one, but so is the amount of debt a person owes, and the type of debt that is involved (i.e. student loans versus credit cards versus long-term loans). If a candidate qualifies, then they go through additional screening and move forward in many cases to approval. However, if a candidate doesn’t quality, their only option is to improve their formula factors or find another option. A mortgage broker can be that alternative to a bank.
The Benefit of a Mortgage Broker
A mortgage broker does exactly that, brokering matches between a borrower and lenders. Lenders are not all alike, and today, banks don’t have a monopoly on home loans. The advantage of a mortgage broker comes with competition. The broker utilizes the broadness of the market and matches the borrower to those lenders that are more likely to accept the candidate as they are. That said, the broker does a lot of work on the candidate to make them presentable too. If, for example, the income picture is independent and doesn’t follow a typical payroll form of documentation (i.e. paystubs), then the broker pushes the applicant to find better proof of income, like tax returns and bank statements. Doing so, the work helps make a candidate present better, which in turn increases the success of being approved.
Working with a Denver mortgage broker, homebuyers can realize a better access to the market as well as have a better chance of being approved for buying as well. That includes packages with good interest rates as well as alternative financing for different scenarios and conditions. A bank denial is not the end, and a broker can help.
