Nowadays, you must obtain mortgage in order to buy a new house. To obtain a mortgage, you either have to deal with lenders and banks directly or hire a mortgage broker, who will do the hard work for you. You might have heard of mortgage broker from your friends or relatives who have recently bought a house or from your real estate agent. What is a mortgage broker and how is it different from the loan officer at bank? In this article, we are going to share the answers of all these questions.
What is a mortgage broker?
In brief, a mortgage is a person who acts as a middleman between mortgage lender and homebuyer. The mortgage broker performs the function of assessing the borrower’s finances, finding appropriate lenders, applying for pre-approvals, gathering necessary documents, completing applications, and advising clients regarding mortgage products. The broker makes money by charging broker or orientation fee which are usually paid at closing or when the loan is sanctioned, They usually charge around one percent to two percent of the total mortgage value. Sometimes the mortgage brokers don’t charge you anything but instead take their share from the money lender after the closure of the loan. This is known as no-cost loans.
what makes mortgage brokers different from loan officers?
Loan officers get a fixed salary (sometimes bonuses too) and are employees of the money lender. These brokers on the other hand either work independently or for a mortgage brokerage company. They are remunerated via commissions. Larger loans ensures more commission.
Advantages of going for a mortgage broker
Saves Legwork – Mortgage brokers know a lot of money lenders. They can guide you through the terms and warn you in case there are any onerous terms present in the contract. However, it is advised that you do your own share of research before visiting a broker. You can use a mortgage calculator to get an estimate of the current rate available. Tools like mortgage calculator will let you compare the rates easily. When you hire a broker, you don’t have to waste time, looking for lenders and instead concentrate on your work. All you have to do is sign the documents since your mortgage broker will do all the hard work to ensure you get the best deal
Brokers Have More Access – There are some money lenders who only work exclusively with brokers. For them, brokers are the gatekeepers when it comes to bringing suitable customers. There are some money lenders whom you cannot call up directly to get retail mortgage and must be contacted only through brokers. Mortgage brokers can also help you to get special rates from money lender since they generate large volume of business.
You can save some fees – There are several kinds of fees involved when you are dealing with a new lender or taking a new mortgage like appraisal fees, application fees, origination fees and more. In many cases, hiring a broker can save you hundreds of dollars if not thousands since they can waive off all or some of these fees.
Mortgage brokers are helpful when it comes to finding loan for your dream house but you must always weigh the potential disadvantages before hiring a broker. Invest some time in research work and try contacting few money lender by yourself to get an idea of the market.