Broker Loan Rate Explained

Anytime you go through a broker, you will need to understand the broker loan rate when you are calculating the figures. Sometimes the broker loan rate can be confusing. But it doesn’t have to be. Here’s a simple explanation of what a broker loan rate is.

Understanding How Brokers Work

If you decide you want to go through a broker for a loan, you will need to understand how they work. The simplest way to explain this is look at the broker as the middleman. When you look for a broker, the broker will ask for the loan on your behalf. The lender will then give the loan directly to the broker, who will then disperse the funds to you. Because the broker is working on your behalf, the broker will have guidelines and standards that you must meet before they will consider underwriting you. Usually you have to have a certain amount of business with the broker already. If you already have assets with the broker this will strengthen your bond and form a mutual trust.

What Is the Broker Rate?
The broker is often able to get a better rate than you would get on your own. The reason is because they have formed relationships with certain lenders who will offer them special rates for a good loan package. The broker rates tend to be very competitive and end up working to your advantage, even after you consider the fee involved with using a broker. The broker is also able to continue to strengthen their rapport with the lenders by offering these loans. So going through a broker serves several purposes for you. Not only do you get a great rate on the loan, you continue to build your relationship with the broker, and the broker is able to continue to offer these services to other through strengthened relationships.

Check Published Rates
Most larger brokerage firms will actually publish their broker loan rates. You can check your local paper, the firms site, the Wall Street Journal, or just call the firm to find out what the rate is. Many times if the rate is lowered before you close the deal they will offer you the lower rate of you ask for it.

A broker loan rate can offer you many advantages, mainly the benefit of saving money. If you have an existing relationship with a brokerage firm it will be worth the time and effort to try to get one of these special rate loans for your investments.

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