A loan broker, or a mortgage broker, is the intermediate person between a lender and a borrower. While a borrower can borrow directly from a lender, a loan agent can help you decide which lender meets the borrower's financial goals. A broker loan is a loan that the lender can force the borrower (a brokerage house) to repay at any time. A broker can work independently or with a brokerage firm.
Mortgage brokers research loan options and negotiate with lenders on behalf of their clients. A broker can also obtain the buyer's credit reports, verify their income and expenses, and coordinate all loan procedures. A lender is a financial institution that provides loans directly to you. A broker doesn't lend money.
A broker can work with many lenders. Like some commission-based financial planners, some brokers mostly work with or are partial to certain lenders, which could influence the options they offer you. Borrowers use mortgage brokers to get a mortgage for many reasons, but the loan that the borrower will use to buy a home will be financed by a bank, not the mortgage broker. A good mortgage broker should be able to provide valuable information, such as which lenders lend money in certain areas, which offer a specific type of mortgage, and which ones accept or avoid loan applications for certain types of homes, such as cooperatives, condominiums, or multifamily homes.
Ask for the names and contact information of several recent customers, then ask them about their experience with the broker. Also, due to rapidly accruing interest, the lender can apply for brokerage loans at any time, possibly requiring the use of proceeds from the sale of customer securities if the brokerage company isn't creditworthy enough to repay the loan with its own cash. Instead, a broker may be able to get a better-rate loan from the bank's wholesale division. Working with a mortgage broker to navigate today's market can be a good decision, especially for a first-time homebuyer.
Also known as a sight loan or sight loan, a broker loan is given to a brokerage house that needs short-term capital to finance clients' margin portfolios. Most mortgage brokers have a group of lenders they work with, and not all brokers work with the same lenders. Whether you use a broker or a lender, you should always look for the best loan terms and the lowest interest rates and fees. Mortgage brokers tend to be more localized, so the best place to start your search is to ask friends, family, and your real estate agent for referrals.
Some brokers charge the borrower directly, rather than the lender; in these cases, this is usually a fixed fee that can be financed with the mortgage or paid at closing. Mortgages are a broker's daily bread and butter, but a loan officer may also be handling other types of loans and may not be as familiar with mortgage lending as a mortgage broker is. If you're interested in a specific type of loan, ask how much experience the broker has with that loan. For people who don't want the hassle of contacting different banks, mortgage brokers are a better option.