Mortgage Brokers: Who Are They, And What Do They Do?
When consumers decide to purchase a home, they have a few options to find the right lender. The easiest option for many consumers is using the services of a mortgage broker to find the right lender based on the situation and the financial goals of the individual or couple involved in the purchase. Understanding the services provided by the broker will make it easier to determine if the professional is appropriate for personal goals or needs.
Definition of the Broker:
A mortgage broker is a professional intermediary who connects a lending institution with a borrower. In most cases, a broker provides freelance services and payment methods are variable. Depending on the broker and location, the payment will either come from a markup in closing costs paid by the consumer or a commission is paid by the bank after closing. By working with several dozen or even more than 100 banks, the broker is able to find the best loan based on the client’s particular needs.
Since a broker is a freelance professional who has many contacts with various banks, he or she is able to evaluate a client’s financial situation, goals and the amount of funds necessary to find the best possible lenders. After assessing a particular client, a broker will submit the application to the top lenders. Consumers will select the final lender after the pre-approval goes through and then the broker works with the lender and client until closing on the house or property.
The responsibilities of a broker selling mortgages to consumers and investors are not limited to only connecting the client with the lender. While matching the buyer to an appropriate lender is the main responsibility of a broker, a few other job duties are expected of the professional.
The broker is responsible for assessing the client. Since consumers will have different needs, the broker must obtain information and evaluate it to find the best match.
In many situations, the broker will offer advice and assistance on making a decision about the best lender. Brokers will explain the legal jargon associated with the loan and will ensure the buyer understands the terms, conditions and clauses in the contract. Since legal jargon is often complicated, a broker must help consumers make an educated decision about the final lender based on factors like closing costs, interest rates, payment scheduling and consequences for late repayment.
The broker is also responsible for pulling up client information to share with lenders. Since the bank does not need to pull up a credit report or other data necessary to process the loan, the impact on personal credit is reduced. The broker will give the bank the credit details to prevent each lender from pulling up the information.
A broker of mortgages is the individual who helps consumers or investors find the right lender based on financial goals, personal finances and credit history. By working with a broker, consumers will have better access to lenders and more opportunities will become available.
Written on behalf of Alberta Funding, A Calgary mortgage broker committed to you and your needs.