Mortgage brokers are responsible for matching borrowers with lenders. For a mortgage broker to be able to offer you a loan they must work with an outside lender. Lenders are responsible for giving clients’ money to fund a home loan. Lenders have a variety of names based on how they acquire their customers and secure them with their loan after it is funded by the bank. For instance, retail lenders reach out to customers directly and do not work with brokers, while wholesale lenders loan money to fund mortgages that have been acquired by brokers who work for outside companies. Finally, correspondent lenders are a mixture of the two. While they often fund loans themselves they will also lock in rates with outside lenders. Mortgage brokers work with wholesale lenders.
Before reaching out to lenders a mortgage broker reviews their client’s financial information in depth to ensure that they match them with the lender that can give them the best terms and rates on a loan. Generally, a broker will give their client several options of lenders to choose from; this is called a mortgage choice. For decades there was only one type of mortgage; a 30 year fixed interest loan. Today, a mortgage is a reflection of a client’s risk level and the level of risk and bank designed to take on that particular client. Some lenders may be able to offer better rates while others may be able to offer better terms. It’s up to each client to decide which loan is right for them.
The main advantage of using a mortgage broker is that they have a reliable database of lenders that helps them find you the perfect fit for each client. The second advantage of using a broker is that they are a cost free way to help home buyers secure a loan. Brokers are paid a Loan Orientation Fee plus a processing fee by the bank. Once a mortgage broker matches their client with a lender their job is done. The remainder of the legal work required to finalize the loan will be processed by the bank and must be finalized before closing on a property.
Mortgage brokers who aspire to be a favorite among clients are those who take the extra time and effort to secure the best loans for each individual. Brokers who care about their clients will go above and beyond to find them the best loan rates and terms available to them.