The Benefits of Working with a Mortgage Banker

Frequently, the first lender a home buyer thinks of when purchasing a home is a bank or savings & loan institution.  While these financial entities do control the majority of mortgage applications, they are not the only player in the real estate market who can help land a mortgage for a home purchase.  Mortgage brokers also have their place, working with multiple institutions to work out financing arrangement for buyers.  That said, it’s important to understand who the mortgage broker is working for at the time and what advantages the broker can really offer.

What Does a Mortgage Broker Offer?

A mortgage broker is a professional financial adviser who can act as a representative in negotiating mortgages between a lender and borrowers.  The first, initial advantage of the broker is his experience and network in the industry.  This level of connection gives the broker an inside path on securing loans that a first-time applicant won’t have, especially if he’s not an existing customer of a lender for other banking needs.  Second, brokers have a pretty good idea what the latest lending criteria requires, which lenders are lenient and which ones are conservative.  This saves time and energy focusing on the right lenders that match a borrower’s financial situation.  Third, the broker manages all the paperwork needs with the lender, cutting down on confusion and delay with a borrower.  They can spell out ahead of time everything a borrower needs to apply, and package the application in one meeting as a result.  This eliminates the need for a borrower to go back and forth with the bank.

“Thank you, mortgage broker”.  Family Photo Session by kristaguenin, on Flickr.  This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.

Who Does the Broker Work For?

Often, in new housing developments, mortgage brokers will be hired by the builder to handle the applications and purchase of new buyers for those homes.  This allows the builder and a preferred lender to work out deals between each other for dedicated business.  While a broker provides advantages in these situations, he or she works primarily for the builder, not the consumer.  So they will work deals to make sales happen, but the terms may be burdensome to a borrower down the road.

Independent brokers can be hired to secure mortgages, but the consumer then needs to pay their service fee, upfront many times, for such assistance.  Further, not every broker works and performs at the same level, so buyers going this route need to research the broker for prior issues or complaints before starting a purchase with one.  Also be aware that some of the larger banks, such as Wells Fargo, no longer accept loans from mortgage brokers.

In Closing

Mortgage brokers provide an assistance for builders, lenders and consumers by working out home loan deals to make a sale happen.  This works well for consumers who need help buying a home, but they need to read the details of the sale contract before committing.  Often, the assistance upfront can come with headaches later on such as a sold mortgage, heavy monthly escrow terms, additional service fees in the sale and so on.  On the other hand, where banks are being too conservative, a broker can often make a deal happen, which can get a family into a home.