Securing a mortgage can be a difficult piece of the real estate puzzle, especially while dealing with a number of other headaches including sticky inflation and low inventory.
However, industry experts suggest there is a “faster, easier and cheaper” pathway to getting a mortgage – using an independent broker.
“Just think about them being your advocate for your mortgage,” United Wholesale Mortgage (UWM) chief strategy officer Alex Elezaj told Fox News Digital.
“Obviously, everybody knows [that] the most expensive investment that people are making is in their homes. And you can’t just go online and click something and expect that you’re going to get the right rate. Most of those are much more expensive. And so, when you’re shopping with an independent broker, it’s faster, it’s easier, and it’s cheaper.”
Elezaj explained there are several misconceptions about using an independent broker that have turned many people away from the mortgage pathway, opting in for retail options like banks or lending institutions.
Most of the myths are due to “legacy issues” and perceptions of brokers prior to the financial crisis, Elezaj reasoned.
“These days, the lender handles everything, so really the broker, their job is to engage with the consumer and then work with the lenders on the back end to make sure that they have access to all these different products and services and pricing that’s out there. So the game has changed a little bit over the years,” he said, adding that observing brokers makes the process easier for buyers.
Other common myths relating to brokers are that they cannot accommodate for specific needs of the clients, they all offer the same services, and they have even become obsolete.
While the retail route is the most common, banks and lending companies offer their own mortgages, but Elezaj argues those are a “captive environment” that does not accommodate individual needs.
“There’s all these different products that are out there, and having an independent [broker] is going to be able to help guide you and make all of these products available to you versus just going into your bank or a retail online company that’s only going to be 1 to 1, and you’re only getting their products or services, their lead times, which is usually not going to be good for you,” he said.
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Lauren DuVall, broker owner of Guardian Core Mortgage, said when leaving the retail space after five years, she noticed how “beneficial” using an independent mortgage broker was for buyers.
“The benefits and the pros totally outweigh the cons in the broker space,” she said. “Being an independent broker and shopping lender that have different pockets where they specialize in, it really allows us to cater that experience for the client, and while also educating and offering great solutions,” she said in an interview with Fox News Digital.
Another broker owner added that while many believe using an independent broker can be a “haphazard experience,” a buyer will get “a more customized experience.”
“[Brokers] have the ability to not only shop the market for the customer, but we end up getting them the absolute best deal and can deliver a mortgage based on their specific circumstances,” Left Coast Lenders broker owner Amir Nurani told Fox News Digital.
Nurani, who worked in the retail channel for roughly a decade, noted another misconception is that brokers are too expensive and that large retail lenders can offer buyers a better deal.
“With the broker, one of the great things is that not only do you get a great cost basis, you also get a great fee structure and low and a low-cost mortgage. So one of these myths… is that you’re going to get a better deal when you go to a big bank or a private lender. Couldn’t be further from the truth. It’s actually cheaper and better with the broker,” he said.
A recent study found consumers can save over $10,000 over the life of a loan working with a mortgage broker compared to a “nonbank retail lender.”
Data from the study also shows that buyers found significant savings upfront using an independent broker. In 2023, homebuyers who utilized independent brokers “paid an average of 115 basis points upfront to obtain a 6.58% average interest rate, compared to 148 basis points upfront and a 6.60% average interest rate in the nonbank retail channel.”
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Nurani said the problem with banks and retail lenders is that they often charge “unreasonable fees” and rates “so far off the market.”
“As a mortgage broker, I’ve found in my experience that the fees are much lower compared to what I experienced in retail. And the fact that, like I said, we just have more options,” DuVall said.
DuVall went on to dispel another myth surrounding brokers, namely that they slow down the process of getting a mortgage. She said working as a wholesale independent broker has significantly cut down her closing time.
“As a retail loan officer, I think our average closing time was about 32 to 33 days. And over on the wholesale side, I’m anywhere from 12 to 28, depending on the situation. Most of them are right around the two-week mark for the closing timeframe,” she explained.
Despite the “crazy” housing market, DuVall said it is “still possible” to buy a home, especially if buyers engage with brokers to curate a custom deal instead of waiting out high rates and inflation.
An independent broker can tailor packages that meet buyers’ needs often at a lower cost and close more quickly than traditional retail options. For buyers navigating a tumultuous market, the promise of speed, ease and cost could change the game.
“Your general paradigm is if you can eliminate the middleman, you’re going to get a better deal. And that’s true in most cases in life… with the exception of mortgages,” Nurani said.
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