Questions To Ask Your Mortgage Broker

Posted on: 29 July 2021

Are you interested in buying a house with a mortgage loan? If so, you might want to hire a mortgage broker to help you find a loan. A mortgage broker is not the same as a traditional lender, yet brokers can find you loans when you need one. If you want to hire a mortgage broker, you might want to ask them a few questions before hiring them. Here are some questions to ask.

What Are Some of the Differences Between a Broker and a Lender?

The first thing to ask is about the differences between brokers and lenders. There are several key differences to understand, and your broker can explain these to you. The main similarity is that both lenders and brokers can find you loans. The difference is how they find loans for you. Traditional lenders offer in-house loans, which means they offer loans through the banks where they work. Mortgage brokers do not work for banks. Instead, they work independently with many lenders. Brokers search through the lenders they work with to find you several loan options. Therefore, the loans that brokers offer are not in-house loans.

How Does a Broker Earn Money?

The second question to ask is how the broker earns money. Do you have to pay the broker for the services? These are good questions to ask. The good news is that you do not pay the broker for finding you a loan. Instead, the lender that offers the loan to you pays the broker a commission. You can compare this to a finder's fee. Lenders compete with other lenders for loans, and they are willing to pay the brokers that find borrowers for them.

How Does a Broker Find Loans?

You might also want to ask the broker about the methods they use to find loans for borrowers. Most brokers find loans by evaluating a person's financial state. For example, your broker will look at your credit score, debt-to-income ratio, and down payment ability. From there, the broker will search for lenders willing to offer loans to people that match your criteria. The broker might find just one lender willing to give you a loan. The broker might also find many lenders willing to offer you loans. If they find several lenders, the broker's job is to compare these loans to pick out the best one.

Are you ready to work with a mortgage broker for a loan? If so, contact one in your area, such as AJM Mortgage Inc., to get started.