Mortgage rates are at 7.25%, dramatically higher than 2.75% about a year ago. And with a recession forecasted, lenders have raised the standards for issuing new mortgages.
That’s where Mortgage Brokers come in. A great mortgage broker will help you select the best mortgage option for you. They could help you lock in the best interest rate with the lowest fees.
Over the life of a loan, a good mortgage broker can save you thousands!
What are Rhode Island Mortgage Brokers?
Mortgage brokers are intermediaries or “middlemen” between the mortgage lender and home buyers.
From shopping various types of lenders to applying for pre-approvals, keeping up with the interest rates and regulations – all of it requires time and market expertise. And that’s where a mortgage broker can help.
A mortgage broker will help you compare top mortgage lenders and choose the best one for your financial needs.
Best Mortgage Broker in Rhode Island
Anchor Financial Mortgage is one of the online platforms with A+ ratings for over 14 years providing tailored mortgage assistance for individual requirements.
- Years of experience: Anchor Financial Mortgage was founded in 2000.
- Interest Rate: Competitive mortgage rates.
- Types of loans: Anchor Financial Mortgage offers FHA, VA, USDA, Jumbo loans, Fixed and Adjustable-rate mortgages, Components of ARM, Balloon mortgages, and Interest only loans.
👉 Our recommendation: Users should always seek out expert advice regarding their mortgage needs.
Anchor Financial Mortgage asks for the following documents from the applicants:
- SSN: Social Security Numbers of all the borrowers.
- Pay Stubs: Last 30 days employer signed pay stubs.
- Tax Returns: Recent 2 years signed personal tax returns.
- W2 Forms: Past 2 years’ W2 statements are required.
- Other Income Proofs: Rental income or Social security income proofs(if applicable)
- Bank Statements: Recent two to three months’ bank statements.
- Assets Declaration: Documents proving down payment from other assets, gift letters, etc.
- Investment: Investment in stocks, mutual funds, 401k, and IRA.
- Debts: Debt declaration like loans, credit cards, and the existing mortgage has to be provided.
- Refinance: Most recent tax statement and copy of deed.
- Purchase and Sale Agreement: Copies of agreements between seller and buyer.
Anchor Financial Mortgage has 4.9 out of 5 stars on Google.
Anchor Financial Mortgage serves 7 states for over 20 years:
- Rhode Island
- New Hampshire
- New York
✅ Advantages of Using a RI Mortgage Broker
A mortgage broker can:
- Help You Understand How Much House You Can Afford: A good mortgage broker will help you estimate your purchasing power based on your income, expenses, and DTI (Debt-to-income) ratio.
- Shop for Quotes With Multiple Lenders: Brokers shop for numerous lenders and can help you secure your ideal mortgage with low interest rates and optimum downpayment.
- Advise on When to Lock Interest Rates: diligent mortgage broker will know where the interest rates are trending and help you decide when is the best time to lock your loan or refinance.
- Get a Faster Pre-Approval: Brokers can help you get a fast pre-approval and accelerate the home loan process, especially if you have already decided which property you want to buy.
- Negotiate and Waive Off Junk Fees: Mortgage brokers will help you understand junk fees charged during loan processing and even get the mortgage lender to waive off some.
❌ Disadvantages of Using a RI Mortgage Broker
- Shop Fewer Lenders: A mortgage lender may not always be able to look at all types of lenders, and will preferably only connect you with the ones in their network.
- Misaligned Interests: Mortgage brokers get their commission from lenders based on the loan principal. To increase their fees, a broker may get you a home loan that you cannot afford in the long term.
How Much Does a Mortgage Broker Cost in Rhode Island?
A mortgage broker’s commission is 0.5% to 2.75% of the loan principal. Some mortgage brokers also charge an hourly rate or provide financial advice for a flat fee.
A combination of these two is also seen, along with the fixed commission they receive from the lender.
Note that this fee is not included as part of the borrower’s closing costs.
🤌 Typical Closing Costs for Buyer in Rhode Island: Breakdown of closing costs associated with home buying.
How Does a Mortgage Broker Get Paid?
Typically, borrowers do not pay the mortgage broker. Not directly, at least. The broker gets their commission from the mortgage lender. This commission is the broker fee and is only paid after closing the loan.
Some brokers may charge the borrowers for their services directly. In that case, the mortgage broker closes the deal at a flat fee that is paid at closing.
Avoid Hidden & Junk Mortgage Broker Fees
Buying a home is probably one of the biggest financial transactions and may feel like a journey of endless closing costs and tremendous paperwork. It is important to keep track of these costs and learn which of them are junk fees.
What are Junk Fees?
When you get a loan, there are some inflated documentation fees or processing fees. Also known as garbage fees, these hidden fees are typically included in or part of your closing costs.
While some of these costs can be legit, it is important to question so that you don’t get overcharged for your mortgage. Here are some examples of the fees you should question:
- Secondary valuation fee: $90
- Underwriting fee: $595
- Doc prep and legal review fee: $295
- Tax service and onboarding fee: $89
- Operations support fee: $200
- Broker origination fee: $7,715
- Loan processing fee
- Appraisal or inspection fee
- Mortgage rate lock fee
The closing statement or closing disclosure provides a breakdown of all the costs and can help you identify junk fees.
While you cannot avoid these fees completely, checking the closing statement can help minimize some of these closing costs. The broker can also negotiate with the mortgage lender and get some of these fees waived.
🤌 Rhode Island Buyer Closing Cost Calculator: Get an estimate of the closing costs you will incur as a home buyer.
Mortgage Brokers vs. Mortgage Lenders
Lenders and brokers are usually associated with home loans, and the two terms are often used interchangeably, but they differ in meaning significantly.
A mortgage lender is a financial institution that will process your application, approve the loan, and credit the amount. A lender can also be an individual, like a hard money lender.
National banks like Bank of America and online money lenders like Rocket Mortgage and Better are some of the top mortgage lenders in the U.S.
🤌 Home Lenders of Rhode Island: Find the top mortgage lenders in the RI.
A mortgage broker is simply a middleman between the borrower and the lender. Brokers will assess your financial situation and advise you about the best lender. They do not process/approve the loan or credit funds in your account.
If you don’t have enough time to evaluate loan options, you should use a mortgage broker to save time and effort.
🤌 Best Mortgage Brokers: Everything you need to know about mortgage brokers in the U.S
Best Mortgage Pre-Approval in Rhode Island: Broker vs. Lender
A pre-approval application is where the home buyer provides proof of funds, credit score, and employment details. This documentation is verified, and the mortgage lender will send a loan estimate outlining the pre-approved loan amount if everything is correct.
Even your mortgage broker can get you a pre-approval within a few business hours of knowing you. However, the credibility and authority of a pre-approval processed via the mortgage lender are substantially higher than that of a broker.
» Preapproval Mortgage: Everything you need to KNOW about mortgage pre-approval.
How to Avoid Problems With Mortgage Brokers in Rhode Island?
Like any other, the mortgage industry is filled with deceptive brokers that can rip you off. You can avoid a broker scam if you do some research about your mortgage broker. It is ideal to compare a few mortgage brokers and ask some questions before choosing one.
Apart from this, you can compare the loan rates and verify the quotations with the mortgage lender to validate the credibility of your mortgage broker. In fact, before finalizing the broker, you should consider checking the reviews from previous clients. It is essentially a preview of the experience you will get.
Understanding how mortgage brokers are paid is also important to avoid being scammed. If the lender pays the broker fee, there is a chance that the broker may accept a higher fee in exchange for an increased mortgage interest rate.
This benefits the broker as they get a higher commission and is an excellent case for the mortgage lender because the borrower will pay more interest over time.
A good real estate company will care about both sides of the transaction & make the transaction a winning bet for all.
👉 Check out our list of real estate companies in Rhode Island in 2023 that’ll work in your favor!
Screening Questions to Ask Rhode Island Mortgage Brokers
If you decide to work with a mortgage broker, here are some things you should ask the mortgage brokers before selecting the one you work with:
- How much do you charge, and who pays your fee?
- Which lenders do you work with?
- How much experience do you have?
- Are you licensed to do business in my state?
- Do you have references?
- How do you handle rate locks?
Is a Rhode Island Mortgage Broker Right for Me?
It depends on your case.
A mortgage broker can save you the time and effort required when hunting for mortgage lenders. Brokers can also save you some fees by leveraging their position in the transaction.
If you are a first-time home buyer with a bad credit score, you should go on the mortgage route via a broker because lenders will most likely reject your application.
In contrast, the money lenders will chase you if you have an adequate or excellent credit score, a lower DTI ratio, and relevant proof of funds.
🤌 Bad Credit Home Loans RI: Learn what you need to do if you have a bad credit score but still want to buy a house.
Rhode Island Mortgage Brokers: Do You Really Need One?
Not really. We can say that you don’t necessarily need a mortgage broker when buying a home. It depends on how engaged and involved you are in your home-buying journey.
Applications and processing that took weeks in the past are now done within minutes by online mortgage lenders like Rocket Homes and Better Mortgage.
You can get pre-approval for your mortgage within 8 minutes when you deal with online lenders. And that says that going solo may not be a bad thing to do in 2023.
🤌 Buying a House in RI: Buying a Rhode Island house shouldn’t be as exhausting. Check out our guide and get a headstart.
Where Are the Cheapest Homes for Sale in Rhode Island?
If you want to keep your mortgage loan amount minimal but still want to purchase a property in the golden state, you should consider cheap alternatives.
1. Buy a Distressed House & Repair
You can find consider homes of distressed home sellers desperate for cash. House flippers, real estate investors, and Rhode Island cash buyers often buy these properties & sell them after making essential repairs.
Distressed home sellers usually sell homes as-is, and depending on the condition of the property, the price can be quite cheap.
Sometimes, homes are in desirable and habitable conditions, but the owners might need fast cash. Such properties may require minimal repairs & can be a smart investment in 2023’s unpredictable housing market.
🤌 Homes for Sale in Rhode Island: Browse homes for sale in Rhode Island & make an offer within minutes with Houzeo!
2. Buy a Foreclosed Property
A foreclosure happens when the borrower has defaulted on the monthly payments. Usually, homes for foreclosure in RI don’t require Rhode Island property inspections & this can accelerate your home-buying journey.
Buying a foreclosed property can be done via the lender’s website or auction websites like Auction.com. Even a short sale is a buying transaction that you can consider.
🤌 How to Stop Foreclosure Sale in Rhode Island: Everything you need to know about foreclosed houses of Rhode Island.
Frequently Asked Questions
1. How much house can I afford?
You need to calculate a few numbers like yearly income, monthly expenses, and downpayment affordability to determine how much house you can afford. The interest rate that the lender offers also plays a huge role in how much home you can afford in the U.S. Calculate your mortgage affordability now!
Why you should use a Rhode Island mortgage broker?
When you use a mortgage broker, you can leverage the broker's experience and network to shop for lenders faster. You can compare multiple lender quotes and even get your pre-approval within a few hours. Check out advantages of working with a Rhode Island mortgage broker.
What does a mortgage broker do in Rhode Island?
A mortgage broker negotiates with lenders to lock in the best interest rate for your mortgage.
Eager to Know How Houzeo Works?
We’ve got you covered. Check out the following video to understand how Houzeo works and why it is one of the best free websites to list for sale by owner in the U.S.
What is Houzeo?
An overview of what the platform is all about
» NEED MORE CLARITY? Read these exclusive Houzeo.com reviews and learn why it is one of the best FSBO sites in America.
- Average Closing Cost in Rhode Island: Find how much you pay at closing when you do a real estate transaction in this state.
- Best Real Estate Websites Rhode Island: Check out our rankings of Rhode Island’s listing websites to find the best one.
- Housing Market Rhode Island: What do you think will happen to RI’s housing market in 2023?
- Best Discount Realtors in Rhode Island: Work with agents and brokers offering a discount in Rhode Island.
- RI Inspection Requirements: List of necessary requirements for home inspection in Rhode Island.
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