What Is a Mortgage Broker and What Services Do They Provide?
Mortgage brokers provide services to individuals and families in order to help them obtain a home loan. This could include locating the appropriate lender, assisting people in filling out their application, getting accepted for a mortgage, or refinancing their current home loan.
What is a Mortgage Broker?
A mortgage broker is an independent intermediary who connects borrowers to various lenders and financial institutions for mortgage lending. They may work independently or as part of a brokerage firm. Their primary responsibility lies in finding the most suitable lender for each client or borrower, as well as gathering all necessary information required by the lender in order to approve a loan.
What Services Can Mortgage Brokers Provide?
Mortgage brokers can locate loans with lower interest rates or better terms than you’ll find if applying directly for the loan. Plus, they help avoid hidden fees and ensure the process is as effortless as possible.
How Do Mortgage Brokers Earn Their Income?
Mortgage brokers earn income through two sources: fees and commission. Brokers usually receive a fee for referring customers to specific lenders and securing approval from those lenders. This fee could be a percentage of what you borrow, which will only be paid when the loan closes.
Some brokers charge borrowers an annual commission that may be higher than their fee for providing advice. These charges help cover overhead expenses associated with finding a loan and offering advice.
Mortgage brokers usually do not make their fees until after the loan closes, making them financially risky. On the contrary, those who charge a percentage of the loan amount are more likely to be successful.
How Can You Locate a Mortgage Broker?
When searching for a mortgage broker, look for those that have positive online reviews. These can be found on sites like WalletHub, Yelp, Google Reviews or other review websites. These comments should cover various aspects of their services so be sure to read each one thoroughly.
You can also inquire at your bank or credit union about their own mortgage offerings. They may have exclusive programs for existing customers, and working directly with your institution allows you to avoid broker fees altogether.
They can assist you in getting a mortgage even if you do not meet the traditional loan eligibility requirements. For instance, if your credit is poor or nonexistent, they can direct you towards lenders who will manually underwrite your loan and give you more of a chance at approval.
If you have a substantial deposit or equity in your home, banks may offer special closing costs or interest rate incentives. They could also assist in finding the mortgage that is most suitable for your financial situation – such as a shorter-term loan.
Additionally, some lenders provide loans exclusively to mortgage brokers. Although these lenders typically provide less competitive rates, your broker can negotiate with them and get them to waive some of their fees – saving you money in the process!