For these reasons, it’s often best to choose a mortgage broker over a lender – especially if you’re looking for someone who can help you find the best mortgage program and interest rate for your needs. A mortgage broker can provide more personalized service and mortgage options than a loan officer at a bank can. Additionally, mortgage brokers typically work with wholesale lenders who have high volume, and therefore need less margin per loan, resulting in a better-priced loan option for you. Lenders, on the other hand, often have higher rates because of their business model.

The “mortgage broker vs bank” debate is a common one for homebuyers, helped by the fact that banks insist they’re a better option for a mortgage, especially for borrowers who have been long-time clients with the same bank. However, that does come without its own set of hoops. Because of the bank's overhead, a borrower who obtains a mortgage from a commercial bank may end up paying more. Instead, a broker may be able to get you a loan with a better rate from wholesale lenders that only work with brokers and pass on the savings to you.

What does a mortgage broker do?

A mortgage broker works with borrowers to gather all the necessary documentation and then submits loan applications on their behalf. Once the loan is approved, the mortgage broker will work with the borrower to ensure that all the paperwork is in order, and that the closing goes smoothly.

A mortgage broker is a bridge between a borrower and the people involved in the lending process, ensuring that communication runs smoothly and keeping everyone on track so that the loan closes on time. There are two types of brokers - those who work independently, and those who are part of a brokerage firm. Mortgage brokers look for and contact lenders on behalf of their clients to help them figure out which loans are accessible and what they would cost.

A broker helps the borrower by pulling their credit reports, verifying income and expenses, and organizing all of the loan paperwork. Some brokers have access to a sophisticated loan-pricing process that prices a mortgage loan for many lenders at once, speeding up and simplifying the procedure for their clients.



How A Mortgage Broker Can Save You Time

There are a number of ways that a mortgage broker can save you time. First, they will do all the heavy lifting for you in terms of finding the best lender and securing the loan. Rather than spending hours researching different lenders and comparing interest rates, fees, and terms, borrowers can simply consult with a mortgage broker to get all the information they need in one place.

Second, a mortgage broker can save you time by handling all the paperwork and phone calls associated with your loan application. This includes gathering up pay stubs, tax returns, and other financial documents, as well as dealing with any questions or concerns that the lender may have.

Finally, a good mortgage broker will be available to answer any questions you have throughout the process and will keep you updated on the status of your loan application. This way, you won't have to waste time chasing down information or waiting for someone to return your call.



How A Mortgage Broker Can Save You Money

In addition to saving you time, a mortgage broker can also save you money on the loan itself. They will work with you to make sure that you are getting the best possible interest rate on your loan. Brokers have access to a variety of lenders and a broader assortment of loans and can often negotiate a lower rate than what you would get on your own.

Mortgage brokers typically charge a lower fee than banks or other lenders for their services. When you obtain a mortgage, you’re likely to be charged an origination fee, application fee, appraisal fee, and more. A mortgage broker may be able to get the lender to waive some of those fees, and charge a lesser fee on their end as well. This means that you will save money on the overall cost of your loan. 

Finally, a good mortgage broker will be honest with you about the pros and cons of different loans and lenders. They won't try to sell you on a loan that isn't right for your situation just because it pays them a higher commission.

Other Benefits of Working with A Mortgage Broker

There are a few other benefits of working with a mortgage broker that are worth mentioning. All brokers have a fiduciary responsibility to their clients. This means that they must always act in your best interests and not try to steer you into a loan that isn't right for you. Additionally, mortgage brokers are required to be licensed by the state in which they operate. This ensures that they have undergone the necessary training and background checks. Mortgage brokers are also regulated by the Consumer Financial Protection Bureau (CFPB), which means that they must follow certain rules and regulations designed to protect consumers.

If you're thinking about buying a home, working with a mortgage broker can help you avoid pitfalls because they are experts in the mortgage industry, the differences among lenders, and the twists and turns in the mortgage process. As an added bonus, a skilled mortgage broker can find the right lender for any situation. For instance, if your credit history isn’t great or the property you’re buying is unusual, a broker can find a lender who has more flexibility with credit scores and down payment amounts or who specializes in certain types of properties.

How much does a mortgage broker cost?

Mortgage brokers typically charge a percentage of the loan amount as their fee that is typically paid by the lender (more on that below). Federal law caps broker fees at 3% and requires that they not be linked to the interest rate on a loan.

For example, if you're taking out a $200,000 loan, a 1% fee would be $2,000. You could also be charged a flat fee of $500 or more by certain brokers. In the few instances, a broker does charge the borrower for their services, borrowers can expect to pay a fee between 1% to 2% percent of the loan principal. Some mortgage brokers work for a particular lender and receive a commission from that lender, while others are independent and charge a fee for their services.

When you're shopping around for a mortgage, be sure to ask about the broker's fees so that you can compare the total cost of the loan. Remember, the lowest interest rate isn't always the best deal if the fees are high.

How does a mortgage broker get paid?

Mortgage brokers typically get paid by mortgage lenders in one of two ways after the loan is closed:

1. Commission: The broker is paid a commission by the lender for successfully arranging the loan. This commission is typically a percentage of the loan amount and is paid to the broker at closing.
2. Fee: The broker charges a fee for their services, which is either a percentage of the loan amount or a flat fee. If your chosen broker charges the borrower directly, the fee is paid by you, the borrower, at closing or can be financed with the mortgage.

Which method of payment is used will depend on the type of loan and the lender. For example, some lenders will only pay commissions, while others will allow brokers to charge fees. Some loans, such as FHA loans, do not allow commissions at all.

In some cases, it all comes down to the information in your application: The lender may charge a higher rate or fees, and the cost of your loan may be higher than what you expected. Be sure to ask your broker how they will be paid so that you can factor this into the cost of the loan.



Should you use a mortgage broker?

You may find yourself asking “should I use a mortgage broker?” If so, here are a few factors to consider in your decision. A mortgage broker helps all kinds of borrowers get the best deal, and this commitment can be especially useful for borrowers with unique circumstances, such as bad credit or a desire to purchase a certain type of property. In addition, a mortgage broker can help you find the best rate in a rising rate environment.

Choosing A Mortgage Broker

If you’re interested in using a mortgage broker, there are a few things to keep in mind when choosing one. First, make sure the mortgage broker is licensed in your state. You can check this easily enough by going to the NMLS Consumer Access Database. Second, ask around for recommendations – family, friends, and even your real estate agent should be able to give you some good leads. Don’t forget to read online reviews and check with the Better Business Bureau for complaints! Finally, when you meet with a mortgage broker, ask plenty of questions and make sure you feel comfortable with them before moving forward. Interview as many brokers as needed so you can get the big picture of how they operate. 

A good mortgage broker can save you a tremendous amount of time and effort, not to mention money by taking on the burden for you and securing a lower interest rate. But not all mortgage brokers are created equal. Be sure to do your research and choose one that you feel comfortable with before moving forward.

Your Next Broker Is At Reliable Mortgage!

If you’re interested in using a mortgage broker but aren’t sure where to start, look no further than Reliable Mortgage! We are a team of experienced mortgage brokers who are committed to helping our clients get the best possible deal on their mortgages. We work with all kinds of borrowers for all kinds of dream homes. Contact us today to learn more about what we can do for you! There is no one-size-fits-all answer to the question “should I use a mortgage broker?” But if you are considering using one and asking for a “mortgage broker near me,” Reliable Mortgage is the place to start!