You’ve probably heard the term “mortgage broker” get thrown around. You may have heard good things, and you may have heard bad things.
Regardless, a mortgage broker is essentially a middleman between the borrower/homeowner and the bank or mortgage lender. They work directly with both the consumer and the bank to help borrowers qualify for a mortgage, whether it be a purchase mortgage or a refinance.
Borrower/Homeowner <— Mortgage Broker —> Bank/Mortgage Lender
As you can see from my rather rudimentary, yet fairly time consuming diagram above, the mortgage broker acts as a liaison between many important entities. The borrower/homeowner end is the retail side, while the bank/lender end is the wholesale side.
So how does this whole mortgage broker thing work?
Well, once a borrower makes contact with a mortgage broker and agrees to work with him or her, the broker will gather important information. Income, asset, and employment documentation, along with a credit report, are necessary to assess the borrower’s ability to obtain financing. A retail bank would collect the same documentation.
Once the mortgage broker has all the important details, they can determine what will work best for the borrower. This may include setting an appropriate loan amount, loan-to-value, and determining which loan type would be ideal for the borrower.
When all the details are ironed out, the broker will submit the loan to a lender they work with to gain approval. During the loan process, the broker will communicate with both the bank and the borrower to ensure everything runs smoothly.
If you use our mortgage broker, you won’t actually work directly with the bank. All correspondence will funnel through the broker and their staff.
Mortgage brokers make money by charging a loan origination fee and/or broker fees upfront.
They can also offer no cost loans by utilizing a lender credit, which will effectively raise the borrower’s interest rate, but eliminate all of your out-of-pocket costs.
Mortgage Brokers Can Shop Your Rate for You
After all the paperwork is taken care of, the mortgage broker will work on behalf of the borrower to find the best (lowest) mortgage rates available. This is the key advantage of a mortgage broker. They have the ability to shop with numerous banks and lenders simultaneously to find the lowest rate and/or the best loan program. If you use a traditional retail bank, the loan officer can only offer loan programs and corresponding mortgage rates from a single bank. Clearly this would lessen your chances of seeing all that is out there. And who wants to apply more than once for a mortgage?
Mortgage Brokers Are Your Loan Guide
Our Mortgage brokers work with borrowers throughout the entire loan process until the deal is closed. Overall, they’re probably a lot more available than loan officers at retail banks, since they work with fewer borrowers on a more personal level.
This is another big advantage over a retail bank. If you go with one of the big banks, you may spend most of your time on hold waiting to get in touch with a representative. Additionally, if your loan is declined, that’s the end of the line. With a mortgage broker, they’d simply apply at another bank.
For more information, please call: 954-534-5071