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Frequently Asked Questions

What is a mortgage broker?

Mortgage Brokers do not lend money to borrowers, but instead negotiate the best available terms and rates on their behalf with lenders. They take into account a borrowers’ financial history, down payment, and the type of property they are interested in buying. They act as a liaison between a borrower and a lender and do much of the paperwork. See The Benefits.

Are mortgage brokers lenders or bankers?

Neither. A broker is a real estate financing professional acting as an independent contractor who performs origination services up to the point of funding. The range of products and services offered through brokers, and by brokers, is evolving rapidly.

Does the mortgage broker really care about the quality of the loan itself?

Yes, absolutely. The safety and soundness of the mortgage lending community is directly linked to the success and integrity of its home loan originations. Furthermore, mortgage brokers represent the single largest residential origination source today, emphasizing that they play a significant role in the mortgage loan process. These numbers highlight the fact that consumers who exercise their choice, choose mortgage brokers; most likely because brokers are dedicated to their customers.

Do brokers work for the lender or the consumer?

Neither. As an independent contractor, the broker allows wholesaler lenders to cut origination costs by providing such services as preparing the borrower’s loan package, loan application, funding process, and counseling the borrower. Brokers help keep loan rates low due to their minimal overhead and setup costs, and from the consumer perspective, with rare exception, the broker does not get paid unless and until the loan closes. Thus, the broker has the ultimate incentive to provide the best possible customer service to the consumer.

Is the broker supposed to get the best deal for the consumer?

Since mortgage brokers offer the products of many wholesale lenders they often can offer consumers a wider selection of loan products, however the consumer retains the ability to determine the best deal for them. For instance, while many would consider “the best deal” to mean “the lowest rate,” a loan program with a very low interest rate may not be the best choice for a consumer with limited cash, if that rate comes with high points and fees. A 15-year loan may save a borrower tens of thousands of dollars in interest payments compared to a 30-year loan, but the higher monthly payments may not be acceptable to the consumer. So, “the best deal” for any consumer depends on his financial circumstances, needs and goals, and these are best determined by consumers themselves.

Today over half of the nation’s mortgages are originated by mortgage brokers. This clearly indicates that consumers are choosing the superior options and services offered by mortgage brokers. Brokers have forced retail lenders to compete with other loan sources driving down costs nationwide.

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