Like you, I wanted to know what does a mortgage broker do? A bit of research didn’t really turn up much information on the subject, so I dug deeper. There is a lot of information on the difference between a mortgage broker and a mortgage banker, how to choose your mortgage broker, and clarifying the difference between mortgage brokers and lenders. This is all good information but not what you and I are looking for, though that information will be really helpful and informative in the future, I’m sure. I wanted information for first time home buyers. Even if you are not looking to buy a new home yet, you may just be in the planning stages and gathering as much information as you can. After all, for most of us, part of the American dream involves home ownership, does it not?
So back to our question, what does a mortgage broker do? According to wisegeek.com: a mortgage broker is a loan provider who serves as a liaison between borrowers and lenders. He or she can work within a firm or independently. That explanation seems really dry to me, why would you need a liaison? Even more important, why would you or I want to give our hard earned money to someone who is essentially a middle man?
Intrigued I did more research. There are a few decent reasons why you would use a mortgage broker, they have to earn their fees. If you are really short on time or have a major aversion to paperwork a mortgage broker might be the way for you to go. They will collect your information and use that information to compare loans, and determine the best type of loans and rates for your specific needs. Essentially their fee covers them doing paperwork for hours and for them doing the leg work so you don’t have to try to compare all the different loans and have to look up all the loan abbreviations.
It seems that the heart of what a mortgage broker should be doing is finding the perfect loan for you by using the information provided to check interest rates, credit, approval, and options so that you can get the best deal and overall save the most money possible. Even if they can only shave half of a percent off of your interest rate that should more than pay their fees and keep a hefty portion of extra money in your pockets over the 10-30 year term of most loans.
It is still vital that you understand the specifics of your loan though and that the mortgage broker be willing to explain to you the terms and conditions of your loan and what all the terms mean. They should explain what your fees are and what your repayment terms are. A mortgage broker should answer all your questions, if they do not know the answer immediately they should be willing to research it. They should also help to make the process easier for you over all, avoiding a large part of the paperwork associated with the purchase of a home.
So these are the responsibilities of a mortgage broker, in general. I hope this article has helped before you get involved into home buying and home loans. But before you jump into a mortgage consultation, remember that different states will have their own rules regarding certification, training, education, and licensed requirements for mortgage brokers. Also, it might be a good idea to first ask your prospective Mortgage Broker if he or she holds a certification or at least a college degree in economics, finance, or business administration. Make sure they are willing to let you know what their fees are up front so you can determine for yourself if this is the route you want to take. If you have the time to do the research yourself and understand all the terms then a mortgage broker may just be an unnecessary expense.