Mortgage Broker

A mortgage broker is a professional whose job is to help people get mortgages. In exchange for arranging mortgages for people the mortgage broker receives a fee or percentage of the mortgage.

Traditionally most people got their mortgages through mortgage brokers or banks. Many people went to mortgage brokers because they could arrange a wide variety of financing deals that banks could not.

Today many if not most people get their mortgages directly from mortgage providers by applying online. Going online can save people money because it gives them access to a wide variety of mortgage products without having to pay fees to a broker.

Advantages to Using a Mortgage Broker

There are some advantages to using a mortgage broker, especially for those who are unfamiliar with the mortgage process. Mortgage brokers know the mortgage market and the mortgage process so they can help you avoid some of the pitfalls involved.

A good mortgage broker should also have a lot of contacts in the mortgage and other businesses which means they might be able to get you a better deal. Many mortgage brokers work with specific lenders and real estate agents. If they have good relationships with these people mortgage brokers can you a better deal.

In some cases a mortgage broker might be able to help you overcome such barriers as bad credit and low income in the quest for a mortgage. A mortgage broker might be able to get a person a lower interest rate or better terms on a mortgage.

Drawbacks to Mortgage Brokers

Some mortgage brokers charge very high fees which can substantially increase the cost of your mortgage. In most cases these fees are added directly to your mortgage. A few brokers will also charge you a fee for their services even if they don’t get you a mortgage.

Many mortgage brokers will have sweetheart deals with lenders, realtors and others. This means they get a kickback or payment every time they steer a customer to that lender or realtor. Such arrangements can be very profitable for the broker but costly for you.

Other mortgage brokers will only sell certain products and not make you aware of other deals that might be more beneficial to you. They could ignore newer mortgage products that could save you money or try to talk you into something you don’t need because it means a higher commission for them.

In many cases an average person can get just a good deal or better on a mortgage by going online and dealing with mortgage lenders directly. There are also online mortgage brokers that offer a wider variety of products and better deals than their brick and mortar counterparts.

Choosing a Mortgage Broker

Before you go to a mortgage broker check and see if licenses are required for mortgage brokers in your area. If licenses are required, ask to see a mortgage broker’s license before doing business with them. You should do this because mortgages set up by unlicensed brokers could be illegal.

You should never pay any sort of fee upfront to a mortgage broker. A reputable mortgage broker will charge you as a fee or commission added to the mortgage. A broker who collects fees up front has no incentive to find you a mortgage.