- A mortgage broker is the middleman between you and the lender, and they take care of a lot of the research that comes with buying a home.
- Some lenders work exclusively with mortgage brokers, and brokers can find you lower rates and better terms than you may be able to find yourself.
- A mortgage broker may be compensated by the lender, or you might have to pay them — be sure to ask about compensation before agreeing to work with a broker.
- To find a mortgage broker, ask family and friends for references or search online, then interview a few companies to find the best match.
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A mortgage broker is the middleman between you and a mortgage lender. Brokers are trained professionals, and depending on which state you live in, mortgage brokers could be required to obtain licenses in order to do business.
When you buy a home, you might research a few lenders and choose one that will accept your credit score and down payment, or the one that offers the best rates. You’ll gather numerous documents, and you may even apply to multiple lenders.
A mortgage broker’s job is to do all that research and hard work for you.
Mortgage brokers have partnerships with a variety of lenders, and they set you up with the best fit based on your financial situation and preferences.
Are mortgage brokers a good idea?
The pros of using a mortgage broker
- A mortgage broker typically has access to more lenders than you do on your own. Using a mortgage broker as a middleman gives you access to lenders you may not have known existed, some of which only do business through mortgage brokers.
- You could get a lower rate and better terms. Yes, a mortgage broker can help you find a lender who will give you a mortgage — but they can also help you find a lender who will give you the best mortgage. A mortgage broker could snag you lower rates and lower fees.
- You don’t have to understand all the mortgage jargon. The benefit of having someone do all the hard work for you is that you aren’t setting yourself up for a bad situation if you don’t understand underwriting or the nitty gritty differences between lenders. Granted, it’s always a good idea to learn as much as possible about what you’re getting yourself into, but a mortgage broker can help you wrap your head around everything.
- You’ll probably save time. When you have a mortgage broker, you don’t have to spend time researching low rates, minimum credit scores, and fees — they do all that for you.
The cons of using a mortgage broker
- You might have to pay them. Before hiring a mortgage broker, ask them how they make money. Sometimes the lender is in charge of paying them, and sometimes it’s your responsibility. If you have to compensate the broker, ask upfront whether they charge a flat fee or work on commission.
- You may be worried about a conflict of interest. If you find out the lender is in charge of compensating the broker, you might feel relieved. But if the lender pays your broker a commission, a broker might be biased toward encouraging you to work with that lender. Again, ask a broker how they make money — and search online or ask friends and family who have used the broker about whether people found them trustworthy.
- Not all lenders work with brokers. Although many lenders work exclusively with mortgage brokers, some don’t work with brokers at all. By going through a broker, you could miss out on certain opportunities.
Tips for finding a mortgage broker
How do you find a trustworthy broker who will find you the best deal? The best option is to ask for references from people you trust. Ask family members and friends who have bought homes whether they used a mortgage broker. If they have, would they recommend the broker they worked with?
Find a few mortgage brokers that spark your interest, and interview each broker before making your decision. Ask the brokers about their certification and experience, be clear about the costs, and talk through how the home buying process will work with a broker.