Mortgage broker: What do they do, and should you use one?

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• A mortgage broker takes care of a lot of the research that comes with buying a home.
• Some lenders work exclusively with mortgage brokers, and brokers can find you lower rates.

Finding the best mortgage lender for your situation can be a tedious, time-consuming, and stressful process. To ensure you choose the best one for your needs and get the best deal, you'll want to do a lot of shopping around and comparing rates. You'll probably even need to apply with multiple lenders just to get a sense of what's available to you.

A mortgage broker's job is to do all that research and hard work for you.

What is a mortgage broker?

A mortgage broker acts as a sort of middleman between you and a mortgage lender. Brokers don't lend you the money themselves. Instead, they do the work of comparing different lenders for you, helping you choose the offer that best suits your needs, and making sure everything is in line for you to close on time.

Mortgage brokers are different from loan officers. Loan officers work for individual lenders, and can only offer you loans that the lender they work for offers. Brokers can help connect you to a variety of types of mortgage loans from many different lenders.

This can be especially useful if you're not sure what you qualify for or need affordable mortgage options, such as an FHA loan or a lender that allows borrowers to make low down payments.

How does a mortgage broker get paid?

Mortgage brokers are typically paid commission on the loans they help close. Usually, the lender is the one who pays the broker, but sometimes the borrower is the one to pay.

Should I use a mortgage broker?

The pros of using a mortgage broker

• A mortgage broker typically has access to more lenders than you do on your own. Using a mortgage broker gives you access to lenders you may not have known existed, some of which only do business through mortgage brokers.
• You could get a lower rate and better terms. Yes, a mortgage broker can help you find a lender who will give you a mortgage — but they can also help you find a lender who will give you the best mortgage. A mortgage broker could snag you lower mortgage rates or fees.
• You don't have to understand all the mortgage jargon. The benefit of having someone do all the hard work for you is that you don't have to be an expert in underwriting or understand the nitty gritty differences between lenders. Granted, it's always a good idea to learn as much as possible about what you're getting yourself into, but a mortgage broker can help you wrap your head around everything.
• You'll probably save time. When you have a mortgage broker, you don't have to spend time researching low rates, minimum credit scores to buy a house, and fees — they do all that for you.

The cons of using a mortgage broker

• You might have to pay them. Before hiring a mortgage broker, ask them how they make money. Sometimes the lender is in charge of paying them, and sometimes it's your responsibility. If you have to compensate the broker, ask up front whether they charge a flat fee or work on commission.
• You aren't guaranteed to get the best deal. Depending on your situation, you may find when you apply directly with a lender that you're offered rates that are just as good as or even better than the ones you'd get through a broker. And if you already know exactly what you want, such as a VA loan, it may save you more time to handle the application process yourself rather than go through a broker.
• Not all lenders work with brokers. Although many lenders work exclusively with mortgage brokers, some don't work with brokers at all. By going through a broker, you could miss out on certain opportunities.

Tips for finding a mortgage broker

How do you find a trustworthy broker who will find you the best deal? The best option is to ask for references from people you trust. Ask family members and friends who have bought homes whether they used a mortgage broker. If they have, would they recommend the broker they worked with?

You can also check review websites such as WalletHub, Yelp, or Google Reviews to find local brokers and read customer reviews.

Find a few mortgage brokers who spark your interest and interview each broker before making your decision. Ask the brokers about their certification and experience, their costs, and how the process of buying or refinancing a home will work with them.