A mortgage broker functions as a middleman who brings mortgage seekers and mortgage lenders together.
The difference between a mortgage broker and a mortgage lender is that the broker doesn’t use funds they hold to originate a new mortgage. The mortgage broker simply aids potential borrowers and helps them connect with lenders.
The broker also works to secure the optimal terms for the borrower’s financial situation and seeks out the most favorable interest-rates.
Mortgage brokers are also tasked with pulling together the reams of paperwork from borrowers, ensuring that all the necessary documents are correct and then hands off the paperwork the mortgage lender.
That paperwork is then subject to review, or “underwriting”, and then submitted for approval.
For their efforts, brokers earn a commission. That commission can be paid by the borrower, the lender or split between the parties as part of the loan closing process.
The Key Questions to Ask Your Mortgage Broker
- Which Type of Loan Suits My Circumstances
- What Will be my interest rate and annual percentage rate for the loan
- How large a down payment will I need
- Can you explain the discount points and origination fees I’ll pay for my loan?
- Can you lay out all the costs for this loan
- Will I have a loan rate lock
- Are there any prepayment penalties tied to this loan
- How long will it take to fund my loan