The mortgage broker is just one of several different sources that home buyers can use to obtain a real estate mortgage.
Mortgage Brokers work with several lenders, also known as mortgage wholesalers, to offer home loan products to home buyers. If you work with a mortgage broker, he/she will do the initial steps of the home loan process: helping to comple the application, obtaining the credit report, ordering the appraisal, verifying employment and assetts, etc.
After the mortgage broker completes these steps he will send the file into the lender to perform the underwriting process. This is where the risk of the borrower is determined. When the home loan closes, you will no longer work with the mortgage broker on that particular loan. Instead, you work with the lender in regard to making your payments and all customer service issues.
These wholesale lenders quote brokers a wholesale price for the loan. The mortgage broker is most often paid directly by the lender. The benefits to using a mortgage brokers are numerous. You will likely get a much better deal when you work with a mortgage broker than you would going straight to the lender. Mortgage Brokers shop with several lenders to find the best price. They can do this without pulling your credit multiple times. Since mortgages brokers have the luxury of working with several different lenders, they are in a position to give you the lowest mortgage interest rate offered in the market place
The mortgage broker is required to show you exactly how much they are making on the loan. Trying to get a traditional mortgage lender or bank to do this is impossible. There are no secrets when you work with a mortgage broker. You know exactly what you are paying and how much goes to each party in the process.
In addition to the best price and most transparent process, mortgage brokers also have the ability to choose a lender that fits the borrower. Sometimes interest rate are not the biggest concern. If the borrower has a unique situation then many times the mortgage broker will have several lenders that may be able to fund that home loan. A bank or mortgage lender has one set of guidelines and if the loan gets denied then they have no choice but to decline the loan. If the processing and underwriting departments are backed up and it is taking 60-90-120 days to process the loans, they don't have the ability to go somewhere where the timeline is much shorter. The mortgage broker can choose to go to the mortgage lender with the best turn around time.
There are many different reasons to choose a mortgage broker or mortgage bank. The most important one is what the borrower has to decide. After deciding what is important and what parts of the home loan process are the most crucial the borrower can determine how to choose the mortgage provider they will work with. There may be several other concerns involved like is the Loan Officer licensed, is the mortgage company you are dealing with respectable, am I confident in their abilities, and many other reasons. It all comes down to what is important to the home buyer.