A mortgage broker acts as a liaison between borrowers and lenders (banks and non-banks). They have to be fluent in lending practices, regulatory terminology and the mortgage loan products of various lenders.
They collect relevant documentation, verify employment and credit, and coordinate with the underwriter and closing agent to keep things moving through to closing day.
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Assisting Clients
Unlike mortgage bankers, who originate, fund and sometimes service mortgage loans with their own funds, a mortgage broker works as an intermediary between borrowers and lenders. They get their loan approvals from the secondary wholesale market and then match each borrower with a lender that best fits their criteria.
Mortgage brokers also gather information and statistics related to various lending options for borrowers to review and compare. They help their borrowers determine which lending option is the most viable for their needs and then prepare the necessary paperwork and documentation.
Many mortgage brokers work at brokerage firms while others operate on a freelance or contract basis. Tied or multi-tied brokers are attached to one particular lender and can offer only the types of mortgage products that their employer carries, while independent, whole-of-market brokers can provide access to a wider selection of mortgage solutions.
Typically, mortgage brokers receive their income from both fees and commission. The amount of each varies depending on the lender and product type.
Researching Loan Options
As a licensed professional, mortgage brokers know the different kinds of home loans and can match borrowers with mortgage lenders that offer products that are tailored to each borrower’s financial situation. Brokers often earn a fee or commission that is paid to them by the mortgage lender at closing.
They can also compare the different types of mortgages available to borrowers and help them understand the fees, contracts and repayment terms they may encounter. They do a lot of legwork, such as evaluating the borrower’s borrowing power by accessing their credit history, assets owned and yearly income.
Mortgage brokers can work independently or with a brokerage firm. Their employer usually provides training on company-specific procedures and loan software. They may also be required to learn industry and regulatory terminology to communicate with their borrowers.
They collaborate with many people throughout the lending process, including real estate agents, underwriters and closing agents. They also liaise with the borrower to ensure all documentation is correct and completed on time.
Negotiating on Your Behalf
Mortgage brokers can leverage their relationships with lenders to snag borrowers better interest rates than they might be able to secure on their own. This is especially important for people with poor credit or complicated homebuying situations.
Mortgages require a lot of documentation, including employment verifications, pay stubs, credit reports and more. Mortgage brokers are skilled at compiling and presenting this information to lenders in a way that makes it easy for them to understand and approve.
Unlike bank loan officers, who offer programs from only one institution, mortgage brokers have access to a variety of lenders and can help borrowers compare head-to-head options. This can save time and money during the mortgage process.
In fact, it’s one of the main reasons people hire a broker to begin with. However, it’s crucial to interview a mortgage broker and ensure that they have the skills necessary to meet your needs.
Closing the Deal
Once a borrower has selected a lender, the mortgage broker typically compiles loan paperwork and submits it to the underwriter for approval. He or she also orders an appraisal and ensures that legal instructions are sent to the closing agent.
Mortgage brokers frequently communicate with borrowers, real estate agents and other financial professionals throughout the lending process, requiring them to understand industry and regulatory terminology as well as use effective communication skills.
A mortgage broker serves as an intermediary between a lender and a homebuyer, providing a range of mortgage loan options from multiple lenders. Mortgage brokers earn a mixture of fees and commission. Choosing the right mortgage broker can save time and money, help borrowers find a suitable lender match, and facilitate the mortgage loan process.
Interviewing different mortgage brokers and asking for online reviews can help borrowers select a reputable professional who values homebuyers, provides proactive guidance and works diligently to close mortgage loans on time.
