Like most mortgage borrowers, your home mortgage is perhaps one of the biggest loans you will borrow during your lifetime. Shopping, comparing, and negotiating for the most favorable mortgage deal can potentially save you thousands of dollars over the life of the loan. Since most borrowers simply don’t have the knowledge, skills, and time required to secure the best deal for their situation, the solution is to work with an expert who does – a mortgage broker.
A mortgage broker is a middleman between mortgage borrowers and mortgage lenders/banks, who gets paid to facilitate a transaction. For mortgage borrowers, a mortgage broker is their personal shopper who works on their behalf to secure the most favorable mortgage rates and terms, in the most timely, efficient, and stress-free manner. For mortgage lenders/banks, a mortgage broker is someone who does all of the work on the loan – from origination to qualification to submission to closing.
Unlike a direct lender or a bank, a mortgage broker works with dozens of different lenders and banks with various loan standards and processes, to offer his clients the widest variety of mortgage programs and products at the most favorable rates and terms possible.
A mortgage broker is considered as:
- An Expert: Mortgage brokers are experienced and qualified industry experts. A mortgage broker has an experience in securing hundreds of mortgages from different lending sources for various credit situations over the years, which can be helpful in identifying and securing the most suitable loan option at the most competitive rates and terms for you.
- A Personal Shopper: Mortgage brokers have the knowledge, skills, and time needed to shop, compare, and negotiate the best mortgage deal for you. A mortgage broker helps you prepare a strong mortgage application that is likely to receive multiple bids from various banks and lenders. The more bidders you have competing for your mortgage, the more you save.
- A Negotiator: Mortgage brokers are savvy negotiators. A seasoned mortgage broker is experienced in negotiating the best mortgage rates, fees, and terms numerous times in the past, which can be invaluable in negotiating the best deal for you.
- A Facilitator: In addition to shopping, comparing, and negotiating the best mortgage deal for you, mortgage brokers also handle all the mortgage-related paperwork, and coordinate amongst various parties involved in the loan process to facilitate a successful transaction.
- Responsive: Mortgage brokers are more accessible and approachable than direct lenders and banks. You can’t reach a direct lender or a bank, but can talk to a mortgage broker anytime during the mortgage process. Also, mortgage brokers don’t keep “banker’s hours”, meaning they are likely be available after regular business hours and on weekends.
Mortgage brokers are typically compensated by the lenders for the services they provide to both borrowers and lenders. To earn your business, mortgage brokers create a multiple bidding situation on your loan application, and then negotiate with all the bidders to ensure that your overall cost of borrowing (interest rates, mortgage fees, miscellaneous charges, etc.) is less than what it would have been had you worked directly with a single lender or a bank.
In a nutshell, a mortgage broker helps you find a better deal on your mortgage than what you might be able to find on your own, while also handling all your mortgage-related paperwork and providing you a superior customer service experience.