Mortgage Brokers Don't Provide Loan Funds or Approve Loan Applications. They help people looking for home loans find a lender who can finance their home. They help people looking for home loans find a lender who can finance their home purchase. Mortgage brokers act as an intermediary for you and many different potential lenders.
Instead of contacting multiple lenders, comparing mortgage interest rates, and filling out multiple mortgage loan applications, a broker will do all the work for you. They are licensed professionals who will search within their network of lenders to find the best rates and terms. They save you time by doing things like running your credit report and collecting important documents. They will then file applications for you and keep you by the hand throughout the loan process.
You hire a broker to essentially do all the work of getting a mortgage. Mortgage brokers, who may work within a mortgage brokerage firm or independently, deal with many lenders to find loans for their clients. Mortgage brokers can give borrowers access to a wide selection of loan types. The person you are working with will have access to many different lenders that offer a wide variety of loan programs.
If it doesn't work with a lender, the mortgage broker can easily handle the transfer to a new lender without needing to work on your part. And the good news is that you won't have to get a new credit report (more on that below). You can save time by using a mortgage broker; it can take hours to request pre-approval with different lenders, then there is back-and-forth communication related to underwriting the loan and ensuring the transaction stays going. In some cases, mortgage brokers can get lenders to waive some or all of these fees, which can save you hundreds to thousands of dollars.
Because brokers with commission can receive a percentage of the loan amount, they may also try to get you to borrow more than you would otherwise get. Mortgage brokers have regular contact with a wide variety of lenders, some of whom you may not even know. Agents can help you understand what documents you'll need to submit to get a mortgage approved and how information, such as your credit score or debt-to-income ratio, could affect your eligibility. Competition is good for consumers, and when you work with a mortgage bank, you have several lenders competing for your business, and all the work falls to the mortgage broker.
A mortgage broker generally works with many different lenders and can offer a variety of loan options to the borrower. These payment structures can create conflicts of interest, so it's essential to know how your broker is compensated. Because lenders who work with brokers generally experience a smoother process, you can get a discount on your loan if you turn to a broker. For this reason, it may still make sense to make some rate purchases on your own, in addition to the offers sent to you by the mortgage broker.
Since California mortgage brokers can work with multiple sources, you're more likely to get the best terms with a reputable mortgage broker than with a traditional bank that relies on name recognition to get your business. Under federal law, the Dodd-Frank Act, the borrower and lender cannot pay a broker. A “Borrower Paid” transaction is when the mortgage broker fee is added to the closing costs and that charge is agreed upon at the time of loan application and submission. Mortgage brokers generally have more experienced, efficient and knowledgeable staff compared to their counterparts who work for traditional banks and direct lenders.
While it's possible to get a mortgage loan directly with your local credit union or bank, the most common mortgage lenders are mortgage brokers. When dealing with direct lenders, there are no brokers to assist you in the tasks of collecting documents and evaluating your financial statement. .
