Mortgage brokers do not lend money. Most of them are firms providing services rather than loans. The lender is the one who provides the money to the borrower at the closing table. The lender also makes the final decision regarding loan approval.A mortgage broker has the ability to utilize hundreds and sometimes even thousands of lenders. By having the flexibility to use so many lenders this gives the mortgage broker access to ten's of thousands of different loan programs and guidelines. In turn, this allows a mortgage broker to find the right loan for each and every individual client. Whereas, most lenders are only able to use one set of guidelines with limited loan programs.
If time is an issuer a mortgage broker may also be able the lender who will be able to close your loan the fastest, which will take all the work out of a borrower having to call several different lenders with no guarantee of a closing date.
A Mortgage Broker is essentially a matchmaker between the lender and the client. The loan officer will match the best lender and program with each borrower.
A mortgage brokers main concern is finding the best deal for there client and not focusing on what bank the loan will go through. With a mortgage broker you also have the benefit of having access to the latest and most up to date loan programs. Most banks can only offer there in house programs which are generally limited when compared to a mortgage brokers wide selection.
It is a myth that it costs more to originate a loan through a mortgage broker. Because lenders give "wholesale" pricing to brokers a customer will normally pay no more or sometimes even less to use the services of a broker. When you consider that the cost is no different and the fact that a broker gives you much more to choose from than going straight to the bank it is easy to see why the majority of mortgage loans in the United States are originated by brokers.
Mortgage Brokers are bound by law to disclose all commissions paid to them. Major banks are not bound by law to disclose commissions, as well as many other factors associated with originating a loan. This can result in the borrower unknowingly being overcharged.
Some mortgage lenders do not have retail operations. Loan programs offered by this type of mortgage banks are not available directly to the general public. They are often loan products designed for home buyers who are in a complicated financial situation. Home buyers can obtain these types of home loans only through mortgage brokers.
Banks on the retail level may have unique programs available to the public, however will more than likely be limited when compared to the many loans programs available with a mortgage broker.
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