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Q:
Why choose a mortgage broker?
A: Mortgage
brokers offer choice, convenience, and expertise
so consumers receive an accomplished mentor
to lead them through the mortgage lending
process. The broker offers the consumer
extensive choices and access to affordable
home loans while balancing the consumer's
financial interests and goals.
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Q:
Have more Americans been able to buy homes
because of mortgage brokers?
A: Yes!
Mortgage brokers provide the most efficient
means of delivering mortgage loans from
lenders to consumers, representing hundreds
of loan programs from all types of lenders.
The loans available from brokers cover the
entire lending spectrum, from conventional
loans, FHA and VA loans, and adjustable
rate loans, to unconventional, nonconforming
loans for consumers with unusual or challenged
circumstances.
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Q:
Are mortgage brokers lenders or bankers?
A: Neither.
A broker is a real estate financing professional
acting as an independent contractor. The
range of products and services offered through
brokers, and by brokers is evolving rapidly.
There are circumstances when brokers may
act as bankers, funding their own loans;
however, the majority of brokers perform
origination services up to the point of
funding.
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Q:
Does the mortgage broker really care about
the quality of the loan itself?
A: Yes,
absolutely. The safety and soundness of
the mortgage lending community is directly
linked to the success and integrity of its
home loan originations. Furthermore, mortgage
brokers represent the single largest residential
origination source today, emphasizing that
they play a significant role in the mortgage
loan process. These statistics highlight
the fact that consumers who exercise their
choice choose mortgage brokers, most likely
because brokers are dedicated to their customers:
consumers, wholesale lenders, and ultimately,
American taxpayers.
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Q:
What role does the broker play versus the
wholesale lender?
A: The
wholesale lender underwrites and funds the
home loan, may service the loan payments,
and ensures the loan’s compliance
with underwriting guidelines. The broker,
on the other hand, originates the loan.
A detailed application process, financial
and credit worthiness investigation, and
extensive disclosure requirements must be
completed for a wholesale lender to evaluate
a consumer's home loan request. The broker
simplifies this process for the borrower
and wholesale lender by conducting this
research, counseling consumers on their
loan package choices, and enabling them
to select the right loan for their home
buying needs. The mortgage loan process
can be arduous, costly, and seemingly impossible
to the consumer. The broker works as the
liaison between the borrower and the lender
to create a cost-effective and efficient
loan process. Many low-income borrowers
with less than perfect credit histories
would not have been able to purchase their
dream home without the assistance and dedication
of a mortgage broker.
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Q:
Do brokers work for the wholesale lender
or the consumer?
A: Neither.
As an independent contractor, the broker
allows wholesaler lenders to cut origination
costs by providing such services as preparing
the borrower's loan package, loan application,
funding process, and counseling the borrower.
Brokers help keep loan rates low due to
their minimal overhead and setup costs.
Furthermore, the broker will seek the loan
that best suits the borrower's financial
circumstances, needs, and goals. From the
consumer perspective, with rare exception,
the broker does not get paid unless and
until the loan closes. Thus, the broker
has the ultimate incentive to provide the
best possible customer service to the consumer.
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Q:
Isn't the broker supposed to get the best
deal for the consumer?
A: Since
mortgage brokers offer the products of many
wholesale lenders they often have the best
selection. This question presumes that anyone
can know what is "the best deal.”
While many would consider "the best
deal" to mean "the lowest rate,"
a loan program with a very low interest
rate may not be the best choice for a consumer
with limited cash, if that rate comes with
high points and fees. A 15-year loan may
save a borrower tens of thousands of dollars
in interest payments over a 30-year loan,
but the higher monthly payments may not
be acceptable to the consumer. So, "the
best deal" for any consumer depends
on his financial circumstances, needs, and
goals.
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FAQs
