Why use a mortgage broker? This is probably one of the questions I get most often as a mortgage broker. First of all, mortgage brokers offer a variety of mortgage programs and rates that other lenders just do not. A mortgage broker usually has numerous banking relationships they are approved to do business with which allows them to offer literally hundreds of rate and program options that a direct lender does not. Why is this? Banks that do business with mortgage brokers do so because it is cheaper for them to use mortgage brokers to originate loans without having the fixed costs associated with staffing and brick and mortar offices. It allows them to obtain the customer through this broker process and ultimately the bank will service the loan which is what mortgage bankers are in the business to do.
Secondly, mortgage brokers are much more regulated than ever before. Mortgage Brokers are required to maintain minimum net worth requirements, annually take continuing education classes and go through rigorous testing to get into the business. As a result, mortgage brokers are required to maintain up to date knowledge of lender and banking regulations. Mortgage brokers are not allowed to charge onerous fees that were once prevalent in the industry. This allows mortgage brokers to be competitive on closing costs.
Finally, mortgage brokers can provide one stop shopping for borrowers. A mortgage broker which has a myriad of institutions to do business with can pass these programs and savings onto potential home buyers. Someone looking to purchase or refinance a home may not be the stellar borrower that banks are looking for today. As such, mortgage brokers can usually pre-qualify a potential borrower into one of their numerous options.