Mortgage brokers act as a liaison between borrowers and lenders.
Often people confuse mortgage brokers with lenders, but brokers offer the loan products of multiple lenders while one lender provides the actual loan money to the borrower. Essentially, a mortgage broker is a loan provider who serves as a liaison between borrowers and lenders. A broker can work within a company or independently.
A mortgage broker does not lend money. Instead, he or she works with borrowers, helping them find suitable mortgage loans. Typically, he will learn the borrower’s needs and do the work of researching the best loan deal with lenders who offer this particular type of loan. Brokers often work with multiple lenders, trying to match the right lender to each individual client. In fact, some brokers have hundreds of contacts with lenders. Because they have so many lenders to choose from, brokers are more likely to find loans for borrowers with special needs, such as bad credit, than individual lenders.
Mortgage brokers act as liaisons between borrowers and potential lenders.
Mortgage brokers accept requests from borrowers and seek to lock in rates and terms with lenders. They also provide required state and federal disclosures. Additionally, brokers gather all necessary documents, including, but not limited to, credit reports, employment checks, asset disclosures, and property appraisals. Once an application file is deemed complete, the broker sends it to the appropriate lender, who then handles loan approval and disbursement.
Often, a mortgage broker will provide basic credit counseling in an attempt to help borrowers fix credit problems. He can also advise borrowers on ways to get better loan rates. Brokers answer questions and help borrowers understand the application process and loan details. They only offer assistance prior to the completion of the loan process. Once the borrower has obtained the mortgage, the broker is effectively out of the loop and all questions must be asked of the lender.
Brokers earn commissions in exchange for bringing together borrowers and lenders. Typically, the broker’s commission is paid indirectly by the buyer in the form of closing costs or additional loan points. The mortgage broker receives payment when the loan is closed.