Mortgage Broker
Mortgage brokers are companies or individuals that work closely with wholesale * mortgage lenders.
"Mortgage brokers" offer to find you a "mortgage lender" willing to make you a loan.
The mortgage broker originates the loan for you. The mortgage lender funds the loan for you.
A mortgage broker may operate as an independent business and may not be operating as your "agent" or representative.
Your mortgage broker may be paid by the lender, you as the borrower, or both. You may wish to ask about the fees that the mortgage broker will receive for its services.
Whether you are dealing with a lender or a broker may not always be clear. Some financial institutions operate as both lenders and brokers. And most brokers' advertisements do not use the word broker. Be sure to ask whether a broker is involved. This information is important because brokers are usually paid a fee for their services that may be separate from and in addition to the lender's origination or other fees. A broker's compensation may be in the form of points paid at closing or as an add on to your interest rate, or both. You should ask each broker you work with how he or she will be compensated so that you can compare the different fees. Be prepared to negotiate with the brokers as well as the lenders.
Advantages of using a Mortgage Broker:
- Mortgage brokers are knowledgeable about the entire loan process, are able to use their superior knowledge to help you secure the best loan to fit your needs.
- A mortgage broker company first tries to find out as much as possible about your needs, then looks at all of the available mortgage programs.
- Mortgage brokers deal with mortgage lenders from across the nation. This helps to guarantee that you will have complete access to the most competitive rates and options that are available nationwide.
- Mortgage brokers offer a larger variety of mortgage options. Banks normally offer only a small number of loan options to you.
- Mortgage brokers only deal with mortgage loans, so the are highly specialized.
- Mortgage brokers are highly motivated to get their customers loans approved, the reason being, they normally only get paid when their customer is approved for a loan.
- Mortgage companies can do a better job of searching around for a mortgage loan than you, if you do not have enough time to research the matter properly.
Disdvantage of using a Mortgage Broker:
- Be careful and only deal with credible mortgage brokers. Some brokers try to charge excessive * closing costs and * points. But you can find some brokers who will do whatever they can to help you.
Where To Find Loan Information:
- You can get a home mortgage loan from many different sources. Banks, savings associations, mortgage companies and credit unions, many of which provide home mortgage loans.
- Your own bank or financial institution, sometimes lenders can offer better mortgage terms to current customers.
- Real estate professionals can give you lots of advice.
- Family members, friends and co-workers may be full of information that could help you.
- Internet research.
- Your local newspaper or the yellow pages.
- Computer loan origination systems (CLOs) are computer terminals sometimes available in real estate offices or other locations to help you sort through the various types of loans offered by different lenders. The CLO operator may charge a fee for the services the CLO offers. This fee may be paid by you or by the lender that you select.
- You may be eligible for a home loan insured through government programs, such as the Federal Housing Administration (FHA) or by the Department of Veterans Affairs (VA). These programs usually require a smaller downpayment. Ask lenders about these programs.
- You can also contact the U.S. Department of Housing and Urban Development (HUD) at:
- U.S. Department of Housing and Urban Development
451 7th Street S.W., Washington, DC 20410
Telephone: 202-708-1112
TTY: 202-708-1455
Glossary For This Page
(In Alphabetical Order)
* Closing Costs
Closing Costs are various fees and expenses (in addition to the price of the property) paid by the seller and buyer to complete the real estate transaction - the transfer of ownership of property from the seller to the buyer. More about Closing Costs
* Mortgage Lender
The lender (a bank or other financial institution) providing money for you for a home mortgage loan. Lenders also manage the credit and financial information review, the property and the loan application process through closing.
* Points
1 percent of the amount of the mortgage loan. For example, if a loan is made for 50,000 dollars, one point equals 500 dollars.
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