What does a mortgage broker really do? How much do they cost? Who pays them? Don’t mortgage brokers work for the Lenders? Mortgage brokers get asked these questions almost as often as they get asked “Should I leave room for cream?” as Starbucks! This post is written to answer these questions.
What is a mortgage broker? Essentially, a mortgage broker is an independent agent that works as an intermediate between the Borrower and the Lender. Mortgage brokers are not affiliated with any Lending institution, bank, or other financial institution and works on behalf of the Borrower. They spend their time looking for the best mortgage products for their clients by reviewing their financial needs and goals. Once the client’s needs and goals have been established, the Mortgage broker looks for the best combination of product, term, and interest rate.
Why use a mortgage broker? A broker works solely on the client’s behalf. In addition, there are so many Lending institutions out there that it would take a significant amount of time for the average person to research every Lender’s products for the most appropriate product for them. In essence, the benefit of using a mortgage broker is the unbiased advice, the ability to have someone research the market for you, and the peace of mind knowing that your largest investment is being professionally managed.
Who Pays Mortgage brokers? This question is probably the biggest misconception about mortgage brokers. Many people assume that because brokers are offering a service to them, it costs money. However, the Borrower does not pay a broker anything. In the majority of cases, the Lending institution pays the Mortgage broker a fee for bringing the mortgage to them. The client/Borrower pays nothing. It does not get built into the mortgage, it is paid solely by the Lending institution. Therefore, the cost of a mortgage broker is $0 to the Borrower.
Where can I find a Mortgage Broker? Most Mortgage brokers have their own websites or have advertising in some capacity. There are many great Mortgage professionals, however the most important quality is your comfort level with them. You will have to give them a number of personal financial documents, divulge personal credit information, and trust them with probably your largest investment. You need to trust them as a professional, and as a person. As with other professionals you hire, the best way to find a qualified Mortgage broker is by referral. Ask your friends or family if they have had a great experience with a broker.
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