About Mortgage Brokers

Contributor

By Jacki Erickson
eHow Contributing Writer

Mortgage brokers serve as the liaison between companies who lend money for mortgages and those who borrow it. The money borrowers seek the services of a mortgage broker to assist them in finding the best mortgage deal. Mortgage brokers are paid a fee or commission for their services to the buyer.

Function

Mortgage brokers generally work for a brokerage company or are self-employed. Brokers who work for a brokerage firm work with numerous lending institutions, so that borrowers have a variety of options when considering a mortgage. The broker's goal is to help the buyer find financing for their property. These brokers then split their commission with the firm that they work for. Self-employed brokers do not have to share there commission; however, they also have to find clients and lenders themselves, rather than working within a company's connections.

Features

Licensing is required for mortgage brokers in 45 states. Some brokers are licensed to broker mortgages only in the state that they work in. Large brokerage firms often require that their brokers get licensed in multiple states so that their clientele can have a wider base. Licensing ensures that brokers understand the mortgage process and can take clients through the mortgage origination process. It also serves as a form of protection for home buyers, ensuring that a broker is capable of handling this crucial transaction.

Warning

Despite licensing requirements, some brokers may not have their clients' best interests at heart. These brokers usually miss deadlines and recommend mortgages to their clients even if the program is not appropriate for that client's financial situation. Mortgage brokers that are certified by the National Association for Mortgage Brokers (NAMB) must abide by strict ethical and professional guidelines that help protect consumers. These brokers are often the best choice for consumers in need of a mortgage broker (see Resources below).

Considerations

While mortgage brokering does not require a specific college degree, a background in finance and real estate is helpful. Brokers work in conjunction with buyers and lenders, so they must have adequate people skills and should be comfortable with sales. Mortgage brokers regularly check credit reports, interest rates and other financial information.

Misconceptions

People occasionally confuse mortgage brokers with mortgage bankers. Mortgage bankers, unlike brokers, actually work with home buyers to borrow money from the institution that they work for. Bankers work directly for the bank rather than for a brokerage firm.