4 FAQs About Mortgage Brokers

If you are looking to buy a home, you shouldn't try to go it alone. A mortgage broker can help you do all the hard work of finding a lender with whom you can work. If you still aren't sure if a mortgage broker is the right choice, check out these four frequently asked questions about mortgage brokers.

What Is a Mortgage Broker?

Unless you are independently wealthy, you'll probably need to take out a loan (mortgage) when you decide to buy a home. Different lenders have loan officers who you must speak with to get the loan. However, they work for the lender, so they have the lender's best interests in mind when making a deal with you.

Another option is a mortgage broker. A mortgage broker doesn't work for any specific lender, so they are fighting to find the best deal for you. You can trust a mortgage broker with your personal information because they are licensed financial professionals. They have to be because you must provide them with all your personal history, including your credit history.

What Does a Mortgage Broker Do?

The short answer, is that a mortgage broker does all the work for you. Typically, if you are trying to find a loan, you want to find the best deal, which takes time and negotiation skills, and you probably don't have time to make a dozen different appointments to meet with lenders. With a mortgage broker, you don't have to.

Mortgage brokers get paid to look for good loans with excellent terms. Therefore, they do have time to really get involved and work with lenders. Once a lender has been chosen, the work isn't over. If you are working with the lender on your own, expect a lot of back and forth calls to check all the details and make sure everything is correct, which wastes more of your time. Your mortgage broker handles all this for you too: everything from start to finish.

Do They Charge a Fee?

A mortgage broker does need to get paid, but that doesn't always mean you have to pay them. Typically, their fee is just a small percentage (1 to 2 percent) of the total loan. This amount can be paid by either you, the borrower (if different than you) or the lender. The loan broker will explain all the fees to you, and they can't suddenly charge you for surprise fees.

One of the reasons for this is the Dodd-Frank Act, which allows you to trust mortgage brokers. Thanks to the act, they cannot charge hidden fees or get paid by you and the lender. In other words, they can't get some money on the side from a lender for pushing you to choose them.

Do Lenders Prefer Brokers?

Lenders tend to prefer brokers, but only because they have the experience and knowledge to really negotiate fair terms. Despite that, you can still go out to some lenders and try to get your own loan. However, there are some lenders who will only work with mortgage brokers.

Of course, all this means mortgage brokers have excellent and more personal relationships with lenders. This means they will be able to get you deals you may not have even considered, and if a lender really likes them, they may even be able to have fees waived.

A mortgage broker can really help you find a mortgage loan because they are working for you. If you would like more information regarding mortgage brokers, contact one in your area today. They can answer all your questions about getting a mortgage loan for your new home.