When it comes to securing a mortgage loan, working with a mortgage broker can be a great way to get the best deal. Mortgage brokers are professionals who specialize in finding the best loan terms and rates for their clients. They have access to a wide network of lenders, so they can quickly compare different mortgage products to find the most favorable rates, terms, and closing costs. The Dodd-Frank Act prohibits mortgage brokers from charging hidden fees or basing their compensation on the borrower's interest rate.
Generally, borrowers pay the broker's fees (usually between 1% and 2% of the loan amount), either in advance or after they incorporate them into the mortgage loan. Mortgage brokers don't work for free, so hiring one adds another expense to the usual costs of buying a home. However, they can save you time by helping you request pre-approval with different lenders and communicating back-and-forth to secure the loan and ensure that the transaction is on course. In addition, mortgage brokers are incentivized to find a mortgage with rates and conditions that fit their clients' needs and wants since they don't get paid unless the deal is closed.
Companies pay their loan sales fees weekly, biweekly, or monthly, while referral incentives and bonuses can be paid monthly, quarterly, or even annually. The competitiveness and prices of homes in your market will influence what mortgage brokers charge. The best way to find a mortgage broker is through referrals from family, friends and your real estate agent. By using a mortgage broker, you are partnering with a well-connected professional who will serve as your comparator and chief negotiator, someone whose job is to offer you the best deal and guide you through the loan process from start to finish.