Mortgage brokers play an important role in the home purchasing process and they are most often involved in a transaction where two or more parties enter into a financial agreement to purchase a home. Typically, a mortgage broker works as an independent intermediary that brokers mortgage loans for companies or individuals. There are many different types of mortgage brokers and choose the one that is best for you will depend on your needs, the type of mortgage loan you are applying for, the company you are dealing with and even your wallet! Here is a brief overview of the different types of mortgage brokers available to you:
Independent mortgage brokers - These are the middlemen. They do not act directly for any specific lender or borrower, but they are still compensated by the lending institutions through commissions or fees. This is because an independent mortgage broker works for the lenders and will only advise and provide mortgage loans to those who are worthy of consideration. Since there is no fiduciary in this case, this type of broker can be very impartial which makes them preferable over other types of lenders who might offer loans to those that are less deserving.
Full Service Brokers - This mortgage broker provide all the needed legwork for your loan application. They have extensive experience in finding and qualifying good borrowers for loans. If you are applying for a mortgage loan for the first time, you should see what kind of assistance you can get from these financial professionals. For instance, you may be able to qualify for an FHA loan even if you do not have a perfect credit history. These financial professionals will also assist you with all the paperwork and other details so that you can get the best deal at the best time.
Government-Based Brokers - In a recent study by the National Association of Home Builders, it was revealed that almost half of all home loans were provided by government-based mortgage brokers. Government-based mortgage brokers are mostly supported by state and local agencies. In most instances, these home loans are backed by the HUD or the Department of Housing and Urban Development. Since the housing crisis has made it so difficult for non-rich homeowners to qualify for traditional home loans, they turn to these government-based mortgage brokers. The problem however is that since a majority of these brokers are government employees, they have strict guidelines when it comes to lending. Even if a borrower has a perfect credit score, chances are that the interest rate offered by these mortgage brokers are still very high. Be sure to view here!
Non-Loan Originators - Mortgage brokers and origination agents working through non-profit organizations are much less biased compared to banks and mortgage brokers working with banks. The good thing about non-loan originators is that they do not require higher loan origination fees or homebuyer fees compared to the other two types of brokers. This means that a first-time homebuyer will be able to save more money when using a non-mortgage originator. However, it is still important to be cautious and read the fine prints of any contract you will be signing with non-loan originators. Make sure that you fully understand the terms and conditions of the contract you are getting into.
Broker vs Mortgage Broker: Even though mortgage brokers do not deal directly with the lenders, they do still have a lot of contact with them. A mortgage broker does the legwork needed to find the best loan officers for a given property, which allows the borrower more options. Since mortgage brokers also coordinate with loan officers, they are able to provide a list of potential loan officers in a given area. The only problem is that the cost of the commission may be too high for first-time homebuyers; however, this is a common problem among new borrowers that opt to work with mortgage brokers. Know more about mortgage at https://en.wikipedia.org/wiki/Repayment_mortgage.