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What Does a Mortgage Broker Do?

 5-MINUTE READ  June 08, 2022


Buying a home is exciting, but you’ll need to seek mortgage funding unless you're a cash buyer. To do so, you’ll need to approach lending institutions like banks and mortgage companies to apply. Applying at multiple banks can be tedious, tiring, and not mention frustrating, as they each have their own set of rules and procedures. Certain lenders might even decline you if you do not meet certain criteria, making it even harder to pursue your dreams of owning a home. 

To reduce this stress, you can use a mortgage broker to cut down your legwork and have them provide you with the best options for your mortgage financing needs.

Before you jump in headfirst with a mortgage broker, you should know what they do, how they work, and the advantages of working with one.

What is a Mortgage Broker?

A mortgage broker is a third party that works between you and the lenders. They are licensed financial professionals that do the legwork for you, shopping with their extensive network of lenders and finding you the best mortgage rates and terms given your qualifications. Mortgage brokers often work with hundreds of lenders, giving borrowers more options to find the perfect loan. If you have a unique situation, such as a low credit score, high debt-to-income ratio, or irregular income, a broker can often find you a suitable lender much faster than you could do on your own.

Mortgage brokers know each lender’s programs intimately so they can match you with the right program rather than you trying to fit into a loan that might not be the right fit for you.

What Does a Mortgage Brokers Do?

Mortgage brokers handle all of the following tasks:

  • Review your mortgage application

  • Pull your credit

  • Match you with potential lenders

  • Answer the underwriter’s questions

  • Gather necessary paperwork from you

  • Coordinate with the title company and appraiser

  • Coordinate the closing

When you work with a broker, you have one point of contact who can keep you informed of everything, including your loan options, current mortgage rates, when to lock in your rate, what documents or conditions are outstanding, and what you must do to speed up the process.

Reasons to Use a Mortgage Broker

You might wonder why you’d use a broker versus finding a lender since there are hundreds or even thousands of options for you.

While you might find a lender yourself, there are many reasons to consider using a broker, including:

  • You need a manually underwritten loan

    If you have no credit, bad credit, or other situations that might cause an automated system to deny your application, a broker can help. Brokers have close relationships with lenders, understanding what situations they accept and when they can work around certain issues.

  • You don’t have a ‘normal’ situation.

    If your income is irregular, you have a high debt-to-income ratio, or your down payment isn’t coming from your funds, you may need a lender that works with unique situations. Going to your regular bank won’t result in the answers you need since they require straightforward situations and decline any applications that are ‘out of the norm.’

  • You want to move fast.

    The mortgage underwriting process can take a while, but when you work with a lender with a faster turnaround time, you’ll close your loan faster. A broker with close relationships with lenders knows each lender’s turnaround time and which would suit you with the best offering, the best terms, and the turnaround time you need.

The Benefits of Working with a Mortgage Broker

Look at all the benefits you’d enjoy working with a mortgage broker.

Save Time

Life is busy, and most people don’t have time to apply with multiple lenders, wait to hear back, and then do the back and forth with each lender to decide if they are right for them.

A broker handles all of that. With one application and a single submission of qualifying documents, you will receive multiple loan quotes and options to help you find the best loan without wasting time or missing out on great mortgage rates.

You May Get Lower Rates.

Mortgage brokers have direct relationships with lenders and may be able to negotiate special mortgage rates just because of the business they send them. If you were to apply directly to the lender, you might not receive the treatment or rates, so it’s worth going through a broker and using their relationship.

You’ll get Financial Advice.

Buying a house is a big deal, and brokers understand this. Bank loan officers often push borrowers into loans they aren’t comfortable with only because it’s all they offer. The loan officers want the business so they’ll do what they can to get you into the loan.

This isn’t the case with mortgage brokers. You’ll have many more options to help you make the most of your loan without taking on a loan that may or may not be in your best interest.

A Mortgage Broker is your Voice

Because securing a mortgage loan is overwhelming, it can be easy to feel uncomfortable asking for what you want. A broker, however, can be your voice. Brokers get to know your situation and what you need, negotiating on your behalf.

This might mean they are trying to get you a lower rate or to get the lender to waive certain fees. Brokers can also work with lenders to get around specific requirements by providing alternative documentation or compensating factors to prove you are a good risk.

Final Thoughts

If you’re in the market for a mortgage, consider using a mortgage broker. You’ll have an advocate on your side working on getting you the best loan, mortgage rates, and terms possible.

You won’t have to do the legwork of shopping around to find the right loan. Everything will be done for you after you complete one application and provide the necessary documentation. Given your situation, you’ll save time and money and know that you have the best loan possible.

Contact Loan Factory today if you’d like to learn more about working with a mortgage broker!

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