A mortgage broker can be useful in the homebuying process to help you sift through mortgage options, pinpoint the best rates and overcome unique borrowing challenges. Although you do have the option of shopping for a mortgage on your own, a mortgage broker can act as a matchmaker hand help you save time and money during your home purchase.

What is a Mortgage Broker?

A mortgage broker is an intermediary who brings mortgage borrowers and mortgage lenders together but does not use their own funds to originate. Unlike a mortgage banker, which offers only one bank’s products and uses that bank to originate loans, a mortgage broker provides access to loans from a variety of bank and non-bank lenders. Mortgage brokers help borrowers connect with lenders and seek out the best fit in terms of the borrower’s financial situation and goals. Typically, mortgage brokers work alongside real estate agents, underwriters, lenders, title companies and attorneys through the entire purchasing process.

What Are the Advantages of Using a Mortgage Broker?

A mortgage broker can simplify the homebuying process by connecting you with appropriate loans based on your personal situation, preparing application materials and guiding you through the underwriting and closing process. They can also save you time and money. Here are some of the advantages of using a mortgage broker below:

• Access to Expert Advice: Mortgage brokers are experts who can provide access to different lenders, loan types and rates. A mortgage broker may be especially useful for first time home-buyers that might not be aware of how the process works.
• A Broker has Better Access: You may not be able to call some lenders directly to get a retail mortgage. Sometimes lenders work with brokers exclusively and rely on them as a gatekeeper to bring in suitable clients. They may be able to use these connections to get special rates due to the volume of business generated that you wouldn’t be able to obtain on your own.
• Save You Legwork: A mortgage broker will help review contracts and payment terms to steer you away from unfavorable borrowing terms. They will help you manage critical paperwork while coordinating loan information with relevant parties, which could help you close your loan and home purchase faster.
• You Can Change Brokers if Unsatisfied: You are not locked into working with a mortgage broker, and can change brokers if you’re not satisfied at any point in the process.
• Lender Generally Covers Fees: While a mortgage broker earns a fee for any closed loans, you are generally not responsible for paying this – it is typically covered by the lender, however, it is important to ask this upfront before agreeing to work together as sometimes the borrower is required to cover fees.

Tips for Finding a Good Mortgage Broker

While looking for a mortgage broker to assist you in the home buying process, shopping around is your best bet. You’ll want to not only find someone that you’re comfortable with, but also a broker who has the right knowledge to support your personal home buying needs.

We recommend asking the following questions as you evaluate different brokers:

#1 – Who are your typical clients?

Think about your goals when you are looking for, so they you can choose a broker who has experience working with similar buyers and knows how to help you achieve your goals. Knowing what type of home you want and understanding your financial profile will help you narrow down which brokers could suit your needs best.

#2 – Are they licensed?

You can easily verify that a broker is licensed through the Nationwide Mortgage Licensing System & Registry (NMLS) website.You can also contact the Consumer Financial Protection Bureau (CFPB) to find out whether the broker has ever been subject to any kind of disciplinary action.

#3 – Will there be any cost associated with working together?

Mortgage brokers are most often paid by lenders, sometimes by borrowers, but, by law, never both. That law — the Dodd-Frank Act — also prohibits mortgage brokers from charging hidden fees or basing their compensation on a borrower's interest rate. You should confirm this with them upfront, before agreeing to work together.

#4 – How long do you expect the process will take?

Are you in a hurry to buy your next home? If so, you need to look for a mortgage broker that is ready to move as fast as you are. If you’re not on a tight timeline, you can focus on finding someone who suits your needs based on knowledge, customer service and personality expectations. It is important to let your broker know your timeline and ask when they will be available to start looking for loans for you and how long they expect for you to get approved.

#5 – What is it like to work with you?

The home buying process can be emotional, with a lot of ups and downs. You want to choose a broker you are comfortable with, and one you are confident will help walk you through these big decisions. You are placing a lot of trust in a mortgage broker to help you understand the terms of the loan and choose the best loan for your unique situation.

How Does a Mortgage Broker Differ from a Loan Officer?

A loan officer is a representative of a bank, credit union, or other financial institution who assists borrowers in the application process. Typically, they are employees of one lender who are paid set salaries and can only write the types of loans their employer chooses to offer.

Mortgage brokers, on the other hand, can work within a mortgage brokerage firm or financial institution independently. They work with many lenders to find loans for their clients, giving borrowers access to a broader selection of loan types.

Should I Work with a Mortgage Broker?

Securing a mortgage is a comprehensive process, including applying for preapproval with differ-ent lenders, multiple rounds of communication with the lender ultimately underwriting the loan and ensuring the transaction stays on track. A mortgage broker can save you time and hassle by overseeing the process for you.

Buying a home will be one of the largest purchases of your life, and it is important to find the mortgage that best suits your needs and financial situation. Working with a mortgage broker can help potentially save you money too, by helping you find a better rate or terms than you might otherwise.

The Bottom Line

Mortgage brokers are licensed and regulated financial professionals who do a lot of the legwork for you. They gather documents from you, pull your credit history and verify your income and employment, using the information to help you apply for loans and negotiate terms and helping you save time and money.

Connect with NYC Mortgage Brokers on Hyponia Homes

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