Finding the home of your dreams can be stress-free with the help of a realtor. But for managing the financial component of this process, you will need the help of a mortgage broker. This is especially so if you’re not the kind who can pay for a home in cold, hard cash, just like the huge majority of American home buyers.
What is a mortgage broker?
A mortgage broker links buyers and lenders. They work with different lending institutions as independent contractors. As such, they are not the original source of funds loaned to the buyer. The primary role of a broker is to assess their client’s financial position and then provide different lending options that their client can choose from. Mortgage brokers work on behalf of their client and only get paid when their client’s loan is approved.
Making the distinctions
There are other professions related to mortgage brokering that may confuse the home buyer so it’s best to know how these other related fields work.
Compared to mortgage brokers who act independently, loan officers work for a specific lending institution and their employer’s interests are the primary concern. They get paid whether the home buyer receives a loan or not. There’s no middleman when working with a loan officer so there are typically fewer fees involved. Funds approved by a loan officer come from their employer. Loan officers also do not require a special license.
A mortgage banker, like a loan officer, is linked with an individual lending institution. Mortgage bankers can be a company, individual or institution. They are considered direct lenders as they are the original source of funds loaned to a buyer. Mortgage bankers also have their employer’s interests in mind when lending funds to an individual. Some states require mortgage bankers to be licensed.
Choosing a mortgage broker
When you sign up for a mortgage, you’re committing to a large amount of debt that has to be paid within a specific period of time. Exhaustive due diligence is therefore required before tying yourself to a specific mortgage broker.
Licensing
Mortgage brokers are subject to federal and state regulation. They require a license that can vary by state. Check the validity of the broker’s license at your state’s professional licensing authority.
Testimonials and referrals
Friends, family, and even realtors are good places for reliable mortgage broker referrals. More often than not, the person sharing has actually worked with that particular broker. Also try to check them out online or request for testimonials from past clients. That way, you’ll find out about this expert’s working style and if it will complement your requirements. Also, check out the Better Business Bureau (BBB) for any possible complaints.
All costs associated with their services
Federal law requires mortgage brokers to give loan estimates of any and all fees related to the loan. The document should include origination fees, possible discount points, appraisal, credit report, lender’s title policy, taxes, and recording fees, among others.
Request for an introductory meeting
Request for a get-to-know-you meeting with a potential mortgage broker to know firsthand if this professional is the best fit for your real estate transaction. More than asking about the services they offer, observe their communication style, level of knowledge, and approach to clients. It is best to speak with at least three brokers before making a selection.
We at California Lifestyle Realty have a wide network of related industry professionals who can help you in your real estate journey. Call us at 760.564.1200 or drop us a note at info@calilifestylerealty.com. We’ll be glad to provide assistance.