A person or entity that specializes in loan originations, receiving a commission to match borrowers and lenders. The mortgage broker performs some or most of the loan processing functions such as taking loan applications and ordering credit reports, appraisals, and title reports. Typically the mortgage broker does not underwrite the loan and generally does not use its own funds for closing. The mortgage is generally closed in the name of the lender who commissioned the broker's services. A mortgage broker will not service the mortgage. An entity or individual engaged to handle or perform, for a seller or correspondent, part of the mortgage application processing, underwriting, funding or postclosing functions, but not any activities related to obtaining an application for a wholesale origination. If you are buying a home and comparing mortgages, you may be wondering whether you need a mortgage broker. That is why you should know what the pros and cons are.
One good thing about a mortgage broker is that he or she will have contact with many different lenders. The more options you have, the more likely you are to get a mortgage that really suits your financial situation. Secondly, a mortgage broker can save you from doing a lot of the legwork of a loan application. Getting a mortgage requires a great deal of paperwork, some of which a mortgage broker will do for you.
You might also be a good candidate to use a mortgage broker if you have less than perfect credit. Lenders pay mortgage brokers to match them with borrowers, and if a lending institution is offering a special program, like a mortgage that does not require verifying employment income, a mortgage broker can profit from selling that mortgage to the right client and, in turn, the client gets the mortgage that best fits their financial picture.
On the downside, using a mortgage broker might mean that your mortgage is not backed by a large bank. Similarly, there are few requirements and regulations for mortgage brokers to pass. Before you contract the services of a mortgage broker, check to see if your state has any licensing requirements. You can then ask friends, family and real estate agents for referrals.