FOR MORTGAGES
 With over 175 mortgage articles and live mortgage rates, this will provide answers to your mortgage questions. |
 Our simple mortgage calculator calculates your monthly payment based on your input. |
 Prequalify for your home loan today! |
How Do Mortgage Brokers Fit Into The Buyer Process ?
During the home-buying process, mortgage brokers are a common channel used to obtain a home loan. Professional members of the National Association of Mortgage Brokers (NAMB) have played a major role in helping consumers secure mortgage financing. Nationwide, mortgage brokers originate two of every three home loans.
Mortgage brokers serve as a mentor to the consumer during the complex mortgage origination process as they are knowledgeable of current industry rates and terms. A mortgage broker is recognized as a independent real estate financing professional who specializes in the origination of residential and/or commercial mortgages. Mortgage brokers are business people who own and operate companies, or work for a brokerage firm, which are typically small and community-based.
Q: Are mortgage brokers lenders or bankers ?
Neither. A broker is a real estate financing professional acting as an independent contractor. The range of products and services offered through brokers, and by brokers, is evolving rapidly. There are circumstances when brokers may act as bankers, funding their loans. However, the majority perform origination services up to the point of funding.
Q: 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.
Q: What role does the broker pay versus the wholesale lender ?
The wholesale lender underwrites and funds the home loan, may service the loan payments, and ensure the loan’s compliance with underwriting guidelines. The broker, on the other hand, originates the loan. A detailed application process, financial and credit worthiness investigation, and extensive disclosure requirements must be completed in order for a wholesale lender to evaluate a consumer’s home loan request. The broker simplifies this process for the borrower and the wholesale lender by conducting this research, counseling consumers on their loan package choices, and enabling them to select the right loan for their home buying needs.
Q: Do brokers work for the wholesale lender or the consumer ?
Neither. As an independent contractor, the broker allows wholesale 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. Furthermore, the broker will seek the loan that best suits the borrower’s financial circumstances, needs and goals.
Q: Isn’t 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. This question presumes that anyone can know what is “the best deal”. 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 the consumer with limited cash, if that rate comes with high points and fees. So “the best deal” for any consumer depends on his financial circumstances, needs and goals.
Q: Do brokers “steer” consumers to the wholesale lender who pays the highest fees to the broker ?
While isolated instances of adverse steering can occur, the mortgage brokerage industry has armed consumers with a free-market economy weapon: open and vigorous competition. Consumers exercising their basic right to shop and compare will ultimately find the loan options that are in their best interests. The combination of government-mandated disclosures and vigorous competition has presented today’s consumers with unprecedented levels of choice. While price is an important consideration in advocating a specific wholesale lender, brokers also make their professional recommendations based on a number of factors which include the lender’s reputation for service, underwriting criteria, ability to fund a loan on time, and compliance with the consumer’s requirements.
Mortgage brokers play a significant role in the mortgage lending process and the
NAMB
Reprinted from Today’s Buyers’ Rep, September 2004