What Does a Mortgage Broker Do?
A mortgage brokers acts as an intermediary between you, a client seeking the best deal on a mortgage, and a bank, looking for clients to sell mortgages to. Shopping around for the best rate and terms of a loan is tedious, takes a lot of your time, and, without close knowledge of the industry, might not be your best option. Mortgage brokers have a network of lenders such as banks and credit unions that they have created a business relationship with. This is why they have the access to the information you might not find and might be able to get you the best deal on your mortgage, both in terms of rate and terms.
Why Should You Work with a Mortgage Broker?
When it comes to looking for a loan, all you have are your local lenders. Some of them might reject you based on your credit history and some of them might not have the type of a loan you are looking for. Mortgage brokers usually have access to lenders all over the country and will work with you to find the best lender that will accommodate your needs. In today's economy this becomes especially essential as it is very difficult to qualify for a loan, whether it's your first mortgage or a refinance, unless you have a top-notch credit history.
How Does a Mortgage Broker Get Paid?
Mortgage brokers do not charge you a fee. Instead, they get paid a commission by the bank you close your loan with. The commission typically ranges from 0.5 percent to 2.5 percent, depending on the size of the loan and terms (fixed or floating). It makes sense for banks to pay a commission to the mortgage brokers, since they are the ones who find the client, and each bank has its own pay structure for this service.
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