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Basically a mortgage broker is a person who brings both the borrowers and lenders together with no generation of own funds to originate mortgage. The broker helps in gathering of the mortgage paperwork from the borrower and passes that log to the lender for signature and approvals. Hence the funds of the mortgage are released in the name of the lender and the broker collects a compensation fee from the lender for the origination of the deal. The broker also accesses the financial worth of the borrower by going through income documents, assets, employment documentation and credit report that helps in determining the appropriate loan amount. Once the loan to value ratio is calculated and the type of loan, it is then sent to the lender as a quotation for approval.
- A mortgage broker can be a wonderful and the best resource for a borrower who has limited or poor understanding of the financial system or their own financial affairs.
- The broker can work on a more personal level to help you get the best deal that is ideal for your unique situation and issues.
- If you have lesser time in analyzing all the financial prospectsin a research for your loan, then a broker can come in handy.
- As brokers act on behalf of the lenders who pay them and may just show you options from a small number of lenders, thereby limiting your options and you may not gain a fair idea of all the different options in the market.
- Educational qualification and the market experiences of the brokers can vary, so make sure to have a background check before opting for services from a particular broker.
Finding the right broker:
Finding the right mortgage broker can be made easy by referrals and advice from family and friends around. But in the process also make sure that the person has accessed the service of the broker previously and isn’t just revealing a distant name being heard. Do some research on their activities, actions, plans, how they deal with clients and other aspects? Another way can be your estate agent as they can provide you with numbers of the brokers they have worked with before and can recommend you a worthy one. It is advised to interview at least before arriving on a decision.