5 Facts About Your Local Mortgage Broker
If you want to choose the best home loan for your financial situation, working with an independent mortgage broker is an important step in buying the home of your dreams.
What does a mortgage broker do exactly? And what are the benefits of using a mortgage broker over an online lender or bank? Here are 5 facts about mortgage brokers that will help you understand their role within the home-buying process and why working with one may be one of the best decisions you can make.
1. What is a Mortgage Broker?
A mortgage broker is a home loan expert that connects prospective homeowners with willing mortgage lenders. There are plenty of options when it comes to lenders, and mortgage brokers shop around to find the best interest rates, terms, and loan products that meet your needs.
When you work with a mortgage broker to buy your home, they gather all the necessary financial documents from you and use it to apply for loans with multiple lenders at once to save you tons of time and legwork.
Once you’ve chosen a loan that meets your financial needs, your mortgage broker guides the transaction through underwriting and closing — communicating with you throughout the process.
2. How are Mortgage Brokers Paid?
Mortgage brokers are paid in one of two ways: either your lender pays them a percentage of the loan total (lender-paid compensation) or you pay them upfront at your closing (borrower-paid compensation). Under the Dodd-Frank Act, mortgage brokers can make no more than 3% of your loan amount.
When you’re searching for a local mortgage broker, be sure to compare their borrower-paid compensation rate with their lender-paid compensation rate. A bit of research before you choose a broker could help you save at the closing table.
3. What’s the Difference Between a Mortgage Broker and a Retail Loan Officer?
A loan officer is an employee of a bank or retail lender that can only offer mortgage loan products and rates on behalf of their employer.
In contrast, a mortgage broker works on your behalf to secure the home loan that best suits your situation and needs. Brokers can work alone or within a mortgage brokerage, but they all leverage access to multiple lenders to present the best loan options available.
4. Is a Mortgage Broker Right for You?
Ultimately, the choice between a mortgage broker and an online lender comes down to your unique circumstances and goals.
Mortgage brokers are licensed experts that guide the home buying process from start to finish and answer any questions that come up along the way. A mortgage broker can also save you time by handling all the loan applications and rate shopping on your behalf.
If you’re the type of shopper who always buys at the first store or gets overwhelmed by options, a bank or online lender may be best. If you want a mortgage veteran to shop loans and communicate with lenders on your behalf to find you the best rate (think lower monthly payments), you’ll need to find a mortgage broker.
5. How Do You Choose a Mortgage Broker?
A bit of research goes a long way to find the right mortgage broker for you. If you have friends or family that have used a mortgage broker in the past, reaching out to them would be a great start to hear about their first-hand experience.
Speaking of reviews, read them whenever they’re available! You may not know the homeowners personally, but their experiences can help you deepen your perspective and make a more informed decision.
Your real estate agent is another great referral source. They’ll likely be able to recommend a local mortgage broker they’ve worked with and speak to any unique loan specialties or services they offer. Or, you can always search for a local mortgage broker right here on findamortgagebroker.com.
With these sources, you’ll likely find a mortgage broker who seems to be a good fit. However, verify your state’s professional licensing authority to confirm that they’re in good standing. You can also check with the Better Business Bureau to ensure that their reputation is solid.
Now that you know some of the benefits of working with a mortgage broker, it’s time to experience them for yourself. Start your search for a local mortgage broker today!