Mortgage Loan Broker: A No-Nonsense Guide

Understanding the services provided by a mortgage loan broker can help you make smart decisions when seeking a new mortgage or refinancing an existing mortgage. Quite often, consumers are confused about the differences between brokers and lenders and don't realize that the two are very different. Sometimes a broker can make the difference between your ability to purchase a home and not being able to find a loan that meets your needs. Brokers can also assist customers in obtaining refinancing and home equity loans.

Mortgage Loan Broker Services

A mortgage loan broker offers several different loan products from many different lenders. A lender simply funds the particular loan product offered. Brokers act as liaisons between the consumer and the lender and can be helpful in finding the right type of loan product for home buyers.

A mortgage broker does not actually fund your loan, but will work with you to find the right lender to meet your needs. If you have poor credit, a broker will quite often have a list of lenders with whom he or she works who are more flexible with home buyers with credit challenges. Brokers often have several loan products from which they can choose to help you find the best loan to meet your needs. Your mortgage loan broker can:

  • provide credit counseling
  • find the right loan product
  • help you with the loan application process
  • lock in your interest rate with the lender
  • gather your required documentation and verification
  • submit paperwork to lender
  • arrange appraisals and inspections

Broker Fees

Brokers earn commissions for finding customers for the lenders they represent. They work to match the consumer to the loan that is best-suited to the home buyer's needs. Most likely, you will, as a home buyer, end up paying the broker fees as a part of your closing costs. Often, the cost is worth it, because the mortgage loan broker is capable of finding loans that you may not have been aware of and can save you much more than you'll pay in commission on things like reduced interest rates and special offers from lenders.

Broker fees are usually calculated as a percentage of the amount borrowed. Using a broker can save you a great deal of time and effort in trying to find the best lender with the best rates on your own, but be sure you understand your broker's fees and get something in writing from the broker clarifying what the cost of his or her service will be.