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The term “mortgage broker” is something that all have heard of but very few understand what he actually does.
Mortgage brokers refer to a middleman between the borrower and the bank or lender. They will be working directly with the consumer as well as the bank. Their job is to help the borrowers to qualify for a mortgage. It does not matter whether it is a purchase mortgage or it is a refinance scheme.
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Hence the mortgage brokers are the liaison between both these important entities. While the borrower will be on the retail side, the bank will be on the wholesale side.
Working Of Mortgage Broker
The borrower has to contact the mortgage broker. Now the broker will get into the job of gathering important information. This would include documentation regarding the income, asset, as well as employment of the borrower. A credit report will also be required in order to assess the ability of the borrower to obtain financing.
Once all these important details have been collected, the mortgage brokers can determine what will be the best deal for the borrower. This would include setting up of an appropriate loan amount, in addition to loan-to-value. Even the loan type will have to be determined.
Once all these details have been worked out, the mortgage broker has to submit the application loan to a lender with whom he works in order to gain approval. During this entire loan approval process, the broker will have to communicate both the bank as well as the borrower in order to ensure that everything is running smoothly.
This means that using mortgage brokers will ensure that you do not have to work directly with the bank. This is because all correspondence will be funneled through this broker.
Here these brokers will be making money by charging the borrower a loan origination fee along with broker fees that are paid upfront.
There can also be no cost loans in which a lender credit is made use of. This will effectively raise the interest rate of the borrower, while other out-of-pocket costs get eliminated.
Borrowers can pay all these costs either at closing or by paying a higher interest rate. You need to tell your broker to discuss both these options clearly before proceeding any further.
You must discuss all the charges before you agree to work with any mortgage broker.
After all the paperwork has been done, the mortgage brokers will be work on behalf of the borrower in order to find the best mortgage rates that are available in the market. This is because they will shop with numerous banks as well as lenders simultaneously in order to find the lowest rate possible for your specific situation. Hence you need to ask your broker to look for multiple quotes from as many lenders as it is possible for them. After all, they are your loan guide. They will be working with the borrowers throughout this loan process until the deal gets closed.