Buying a new car, purchasing an apartment, and expanding an existing business are just a few popular examples of why people seek credit financing. Furthermore, loan acquisition helps people accomplish tasks they would otherwise be unable to fulfil with their regular incomes. Though loans have become part and parcel of our modern day lifestyle, it’s always important to understand the borrowing options at your disposal. Loan brokers are the experts who assist borrowers find the best credit financing options for their needs.
Who is a loan broker?
A loan broker is an individual or an institution that acts as an intermediary between a borrower and a lender. In the past, banks and other financial institutions have preferred to sell their own services directly to clients. However, as the lending market becomes more competitive, loan officers are in demand now more than ever. Unlike lenders, brokers do not lend money; instead, they work closely with several lenders to make credit available to borrowers.
Dealing directly with a single bank can limit your loan options. On the other hand, loan officers usually have a variety of financing options form different lenders. It is their job to find a loan that works best for you. Because brokers don’t work for any specific lender, they often charge a fee for their services which are either settled by the borrower or lender.
Types of loans you can get from your broker:
Mortgage brokers are the most common type of loan officers. A mortgage is a form of credit that you acquire to purchase real estate property. Mortgage arrangements allow borrowers to own residential properties such as homes, but should they default on the loan, the lender has the right to seize the property in question. In short, your home acts as collateral for your loan. It’s also important to note that there are two primary types of mortgage; adjustable rate and fixed rate mortgage. Fixed rate mortgage means the interest rate remains the same throughout the repayment period while for the adjustable rate the interest rate fluctuates depending on the nature of the housing market.
The role of a broker with respect to mortgage loans may include the following; filling application forms and submitting the details to a lender, applying for a pre-approval on the borrower’s behalf, assessing the borrower’s financial situation (obtaining credit reports and ratings), marketing a lender’s services to potential clients and matching mortgage products to client’s needs.
Auto loans, also known as car loans, allow you to easily purchase a vehicle and pay for it in monthly or periodical installments. Today, many car dealerships have embraced the auto loans. In fact, in some dealerships, auto loans account for over 50% of all car ownership deals. Similar to mortgages, your car automatically becomes the collateral and will be repossessed in case of default. Your broker will be in charge of offering the best advice to ensure you’re not paying over the top fees for your vehicle. Their duties also include providing legal advice to clients as well as filling all necessary documents.
What if you could take a loan to cover your tuition fees, exam booking, living expenses, and books? Well, student loans are designed to cover all the above. Student loans are eligible to college going students as well as those pursuing masters and doctorate programs. One benefit of student loans is that they are usually subsidized by the federal government meaning their interest rates are lower than most other loans.
Home improvement, personal loans and personal lines of credit are represented other types of loans that can be acquired via your broker. All in all, your broker should do their best to ensure your application is successful when applying for these types of loans.