Around 670,000 homes were sold in the US last year.
With this comes a need to find a lender and a mortgage. If you’re new to the home-buying process, this choice can be so overwhelming!
With so many different options and plans, how are you supposed to know which is the best for you? Well, that’s where mortgage brokers come in.
A mortgage broker is going to make finding a lender and a mortgage much easier for you, as they have the experience to do so.
Keep reading to learn more about what mortgage brokers do and how they get paid!
What Do Mortgage Brokers Do?
The job of a mortgage broker is to help you find the best loan for your unique situation.
If you try to get a loan through a bank, you only have the option of getting a loan that they offer. This offers a much more limited selection of loans to choose from.
When you go through mortgage brokers, they will tailor your loan experience to your situation. Mortgage brokers have access to a variety of loans from different lenders, so finding a loan that works for you may be easier.
How Do Mortgage Brokers Get Paid?
Mortgage brokers don’t work for banks, so they aren’t paid by a bank.
Since mortgage brokers operate independently, you’re responsible for paying a fee when you go through one. The fee that you pay will be a small percentage of the loan you’re receiving.
The fee is typically 1-2% of the total loan amount. Luckily, your mortgage broker will inform you of any fees before you begin the process. This way you aren’t hit with any surprise fees that put you in a compromised position!
How Mortgage Brokers Can’t Receive Payment
Trusting a professional to help you choose a loan can make some people uneasy.
I mean, how are you supposed to know that they aren’t choosing the deal that will get them the best pay? Or, how do you know that you aren’t going to end up with thousands of dollars in random fees by the end?
These actually aren’t possibilities because of the Dodd-Frank Act.
The Dodd-Frank Act has made it illegal for mortgage brokers to:
- Charge the borrower any hidden fees
- Have a payment tied to the interest rate of the loan
- Receive payment for recommending a title company to you
- Be paid by the borrower and the lender
So, your mortgage broker is not legally allowed to base your loan off of their financial gain in any way. The loan they choose for you is solely to benefit you.
Are You Ready to Work with a Mortgage Broker?
If you need a loan for buying a home, don’t feel like you’re alone in the process.
With so much to take care of in the home-buying process, let a mortgage broker take the reigns on finding a loan for you. The job of mortgage brokers is to find you the best loan for your unique needs, so you may end up with a better loan than you could find on your own.
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