How Are Mortgage Brokers Different From Loan Officers?
Posted on: 25 February 2022
If you're looking for a mortgage, there are several different people you can go to, including mortgage brokers and loan officers. How are they different, and which one is right for you?
What Is a Loan Officer?
A loan officer helps people apply for mortgages by helping them understand what kind of loans they qualify for. Loan officers must know about different kinds of loans, banking laws, and how to document applications.
Loan officers usually work for a single lender. They help borrowers decide what type of loan is right for them. Loan officers also help prepare applications and pass them along to underwriters. Underwriters evaluate the creditworthiness of applicants before approving or rejecting the loan. Loan officers are responsible for documenting the loan and getting it closed.
What Is a Mortgage Broker?
Mortgage brokers work like a matchmaker. Borrowers can use them to find the best lender for their financial situation. This saves borrowers time and effort during the search process.
Mortgage brokers earn a commission when you close on a loan. Their commissions are based on the size and type of the loan. You should always shop around yourself for the lowest possible rate and best terms.
Is It Risky to Use a Mortgage Broker?
Mortgage brokers and loan officers are both considered mortgage loan originators. You might be worried they won't be able to find you a lender.
However, the mortgage brokers know what types of loans their lenders will accept. Since a mortgage broker can go to multiple lenders, your chances of approval are actually higher than if you go to a single lender.
How Much Do Mortgage Brokers Cost?
Brokers get paid for selling loans. Brokers usually charge a percentage of your loan amount. You should know how much you'll be charged before you sign up. In some cases, you can avoid fees by going directly to a bank. However, many banks have their own application fees, so it might not be cheaper than a broker.
A mortgage broker can also help you save money by helping you to find a lower interest rate. Most people don't want to apply at dozens of banks, but that's what a mortgage broker does for you. Over the life of your loan, the interest that they save you works out to be a lot more than the fee that they charge.
To learn more about getting a mortgage, contact a local mortgage broker today.
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