What is a mortgage broker?
A mortgage broker is a licensed professional who acts as an intermediary between borrowers and lenders. Their job is to help borrowers find the best mortgage products to suit their needs and guide them through the application process. Mortgage brokers have access to a wide range of mortgage products from various lenders, including banks, credit unions, and private lenders.
Mortgage brokers earn a commission from the lender for each successful loan application they facilitate. This commission is usually a percentage of the loan amount, and it’s paid by the lender, not the borrower.
How do mortgage brokers differ from banks?
Banks are financial institutions that provide a wide range of financial services, including mortgage lending. When you apply for a mortgage at a bank, you’re dealing directly with the lender. This means that the bank’s loan officers will assess your application, decide whether to approve or reject it, and determine the terms and conditions of the loan.
Mortgage brokers, on the other hand, work independently of lenders. They have access to multiple lenders, which means they can compare mortgage products from different providers to find the best deal for their clients. A mortgage broker will work with you to understand your financial situation and your borrowing needs, and then recommend the most suitable mortgage products from their lender network.
One of the biggest advantages of working with a mortgage broker is that they can often secure better mortgage rates and terms than you could get on your own. Mortgage brokers have established relationships with multiple lenders, which gives them bargaining power when negotiating on your behalf. They can also help you navigate the complexities of the mortgage application process and provide advice on how to improve your chances of getting approved.
Another advantage of working with a mortgage broker is that they can save you time and hassle. Instead of having to apply to multiple lenders yourself, a mortgage broker will do the legwork for you. They’ll gather all the necessary documentation, submit your application to the lenders, and manage the process from start to finish.
Of course, working with a mortgage broker isn’t free. As we mentioned earlier, brokers earn a commission on successful loan applications. However, this commission is usually paid by the lender, not the borrower, so there are no out-of-pocket costs for using a broker’s services.