Mortgage brokers act as agents for consumers looking for the best deal possible on a home mortgage loan. Lenders at banks may not be able to find the most competitive interest rates out there.
Mortgage brokers can help consumers become more educated about the various kinds of loans out there, some of which are subsidized by the government. Mortgage brokers find and place mortgage loans with consumers who need it to buy a house.
It used to be that this role resided solely with the banks, but many independent mortgage brokers exist today. They are usually not direct employees of a single mortgage company, but they seek to find the best company for each borrower.
Some companies are better suited to lower income or higher income borrowers and the mortgage broker’s business is to know which is which. They operate on a fee basis, which works like a commission, and this can be paid by the borrower or the lending institution.
It is normally in the ballpark or 1-2% of the value of the loan. They also educate consumers and help them navigate the various programs offered by federal and state entities that may help them acquire the home they want at a rate they can afford.
Mortgage brokers must be licensed. The National Association of Mortgage Brokers is a self-regulating and lobbying group that helps to keep standards and laws as uniform and appropriate as possible, but most states have their own requirements.
Sometimes proof of industry experience, as with a bank, will allow the applicant to skip any examination requirements, but some courses must be taken online prior to being licensed, and a licensing fee must be paid.
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