What exactly is a mortgage Broker?

A mortgage broker is an independent real estate financing professional who specializes in the origination of residential and or commercial mortgages. A broker typically passes on the actual funding and servicing of loans to capital sources that act as the loan "wholesaler". Most major banks for example have a wholesale lending department.

An average broker will work with anywhere from 40 to 60 wholesale lenders. A good mortgage broker who is well educated on loan programs can offer the consumer the most efficient and cost effective method of obtaining a loan.

How does a mortgage broker get paid?

A mortgage broker can get paid in one of three ways:

1. In whole by the lender
2. In whole by the consumer
3. In part by the consumer and the lender

The most common way a competitive mortgage broker gets paid is in whole by the lender. However, it will vary based on the loan program the consumer selects.

Is a mortgage broker always going to get the best deal for the consumer?

Since mortgage brokers offer products from many wholesale lenders, they often have the best selection of loan programs and rates. The question is, can anyone really presume to know what the best deal is? There are thousand of lenders and thousands of products available, and it is therefore impossible for any broker or bank to guarantee the lowest possible rate. A consumer should compare and select based on the following criteria:

1. Loan programs that meet customer  requirements 
2. Rates 
3. Points 
4. Terms

Points is perhaps the most important thing to compare, as they can be called many things including:

· Broker fees · Loan origination fees · Loan discount fees

If the bank pays the mortgage broker, doesn't it end up costing the consumer more?

No. Not only can brokers find consumers a better deal; in fact it is often more cost effective for the bank to pay the broker a fee per transaction, than it is for them to maintain retail loan departments. Mortgage brokers arm the consumer with a free market economy weapon: open and vigorous competition.

Any consumer who takes the time to shop the market will ultimately find the best deal. Remember, however, that although price is important, a mortgage broker will also shop based on the following:

1. Compliance with consumer  requirements 
2. Reputation for service 
3. Underwriting criteria 
4. Ability to fund a loan on time