What is a Mortgage Broker … and What Are the Advantages of Using One?

 A mortgage broker’s job is to work for you as the liaison or connection to a lender.

You benefit because you don’t have to deal directly with different lenders or shop from bank to bank in search of the best rate and places where you qualify. Basically, when you use a mortgage broker, all the shopping is done for you.

Mortgage brokers have access to a national pool of lenders, ensuring you get the loan that best fits your situation. The process starts with your mortgage broker compiling your application, reviewing your financial situation, evaluating your credit score and assessing your job status. After these results are compared with what you need, the shopping process begins.

Not only do you save time by not having to go from institution to institution, but you also don’t get locked into a bank’s product. Keep in mind, each bank has its own mortgage criteria – they have their own products they want to sell you. If you don’t fit into their products, then you won’t get financed.

If you’re someone with bruised credit, a weaker job history or a past bankruptcy that has been discharged and you’re re-establishing your credit, most times banks will immediately veto you. Or, in the unique case where a bank does work with you, you’ll get higher interest rates.

But lending isn’t only limited to national banks.

Mortgage brokers also have access to all types of lenders (including private), mortgage institutions and trust companies. The selection of lenders that mortgage brokers have available far exceeds what a bank can do. And, oftentimes, mortgage brokers can beat a bank’s interest rate.

In some cases, mortgage brokers will get up to 0.4% less than the bank on an interest rate because they provide such a volume of benefits that lenders reward them with discounted rates.

What is arguably the biggest benefit of using a mortgage broker is the fee. From the first consultation to the signing of your mortgage, most services are free. (Fees are only charged when a client has very bad credit or second/third mortgages, and for commercial lending.)

Can you experience the benefits of a mortgage broker even if you have bruised credit?

Yes. While banks will likely turn you down or make the lending process more difficult, mortgage brokers have lenders that specifically work with, and for, clients with bruised credit.

Now, obviously, you might have to pay a slightly higher interest rate. But the product you get is, many times, comparable or better than what a bank would offer.

Mortgage brokers have lenders that work with people who have credit in the 550s. Banks, however, consider 600 - 620 as the bare minimum – and they prefer a 650 score. So, by going with lenders outside of the national banks, you get the opportunity to be a homeowner, even if you made mistakes or had some bad circumstances.