Mortgage brokers are among some of the most misunderstood mortgage professionals. There is a lot of confusion from the public about what a broker actually does and under what circumstances someone would want to use a broker. Here are some of the most common myths about mortgage brokers and the truth.
A Broker Is Paid by the Client
Many home buyers believe that using a mortgage broker will cost more because of the commission paid to the broker.
That is simply not true.
Similar to a travel agent, a mortgage broker is compensated by the company that the service or product is placed with. In the case of a mortgage, the lender, not the client, pays the broker.
Brokers Steer Customers Toward Loan Products That Have Higher Interest Rates So They Get Paid More Commission
Brokers work hard to get their clients the best mortgage at the best rate.
The amount of commission is not based on the interest rate, so it does not affect this at all. Rather, it is based on the amount of the mortgage.
A Buyer Can Easily Do the Things That a Mortgage Broker Does
This is not true. A mortgage broker can help a buyer save money and help the home loan process go quicker and smoother. Here are some of the things that a mortgage broker can do:
- Share inside knowledge – A mortgage broker has inside knowledge of the lending process and can share that knowledge with buyers to help them get the best possible mortgage.
- Compare different lenders – Although a consumer can compare lenders online, many comparison sites lack important details. Thus, the buyer will likely have to go to each lender to obtain more information. This takes a lot of time. A mortgage broker, on the other hand, can easily compare lenders in mere minutes.
- Negotiate discounts on interest rates – Mortgage brokers work with lenders daily, so they know how to get the best discounts with lenders.
- Save money on a mortgage – Mortgage brokers can help buyers identify ways to save money on a mortgage by utilizing different strategies, such as bi-weekly payment schedules.
- Help with paperwork – The paperwork associated with obtaining a mortgage can be quite cumbersome. A mortgage broker can assist buyers with completing all paperwork, relieving the buyer of this burdensome task.
Mortgage Brokers Are Only for People With Bad Credit
Some people believe that mortgage brokers are only for people with bad credit — those who have tried all the banks and cannot get an approval.
In reality, the services of a mortgage broker can benefit any buyer, regardless of their credit history.
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