So, you are planning on applying for a mortgage loan, but you also aren’t sure if you should hire a mortgage broker to assist you through the process? It is important to understand what mortgage brokers do and their role during the mortgage application process. By learning about their various responsibilities and how the mortgage application process would operate with their help, you may be able to decide if hiring a mortgage broker is the right decision for you.
Mortgage Broker Explained
A mortgage broker is a financial intermediary who connects mortgage borrowers with mortgage lenders. Therefore, brokers act as a third-party intermediary between the borrower and lender during the mortgage loan transaction.
Potential borrowers usually choose to hire a mortgage broker to ensure that they get the best interest rates possible and best terms on their mortgage loan. Because of their expertise and experience in the mortgage industry, mortgage brokers can help save their client – the borrower – time and effort during the mortgage loan application process, and money on the mortgage loan.
Mortgage Broker Responsibilities
So, what do mortgage brokers actually do? As mentioned early, mortgage brokers serve as the intermediary between the borrower and lender in the mortgage loan transaction. A mortgage broker will gather the various loan options offered by different lenders in the market and present those options to the borrower. The mortgage broker will also work on getting the borrower qualified with those different lenders for those loan options.
Mortgage brokers will also work on consolidating the borrower’s financial information including bank statements, employment documentation, assets, credit report, etc. This information is a necessary part of the application and allows lenders to analyze the ability of borrowers to make repayments on the mortgage.
The mortgage broker consistently communicates with both the borrower and lender throughout the entire duration of the transaction.
Mortgage Broker vs. Bank
Although mortgage brokers can help the mortgage loan application process run effectively and efficiently for the borrower, the broker cannot actually provide the funds for the loan. That is where banks come in.
Banks are the financial institutions that lend out the funds for a mortgage loan to the borrower. Mortgage brokers are not a required part of the mortgage loan process. Potential borrowers can go directly to a bank and apply for a mortgage loan. Mortgage brokers simply assist you with the process, and they may be able to secure you a mortgage loan that has a better rate and terms.