5 Facts About Working With a Mortgage Broker

Mortgage Broker

A mortgage broker manages the process for you by applying for loans with different lenders, finding competitive interest rates and negotiating loan terms.

Feb. 27, 2019

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You’ve narrowed down the search to find your dream home, and now you’re on the hunt for the best mortgage to put those keys in your hand. One way to do it: Work with a mortgage broker who can shepherd you through the lending process from start to finish.

You’ve probably heard the term “mortgage broker” from your real estate agent or friends who’ve bought a home. But what exactly is a mortgage broker and what does one do that’s different from, say, a loan officer at a bank?

Here are five of the most common questions — and answers — about mortgage brokers.

In this article

  • 1. What is a mortgage broker?
  • 2. How does a mortgage broker get paid?
  • 3. What makes mortgage brokers different from loan officers?
  • 4. Is a mortgage broker right for me?
  • 5. How do I choose a mortgage broker?

1. What is a mortgage broker?

A mortgage broker acts as a middleman between you and potential lenders. The broker’s job is to work on your behalf with several banks to find mortgage lenders with competitive interest rates that best fit your needs. Mortgage brokers have a well-developed stable of lenders they work with, which can make your life easier.

Mortgage brokers are licensed and regulated financial professionals. They do a lot of the legwork — from gathering documents from you to pulling your credit history and verifying your income and employment — and use the information to apply for loans for you with several lenders in a short time frame.

Mortgage brokers are licensed financial professionals. They gather documents, pull your credit history, verify income and apply for loans on your behalf.

Once you settle on a loan and a lender that works best for you, your mortgage broker will collaborate with the bank’s underwriting department, the closing agent (usually the title company) and your real estate agent to keep the transaction running smoothly through closing day.

5. How do I choose a mortgage broker?

The best way is to ask friends and relatives for referrals, but make sure they have actually used the broker and aren’t just dropping the name of a former college roommate or a distant acquaintance. Learn all you can about the broker’s services, communication style, level of knowledge and approach to clients.

Another referral source: your real estate agent. Ask your agent for the names of a few brokers that he or she has worked with and trusts. Some real estate companies offer an in-house mortgage broker as part of their suite of services, but you’re not obligated to go with that company or individual.

Finding the right mortgage broker is just like choosing the best mortgage lender: It’s wise to interview at least three people to find out what services they offer, how much experience they have and how they can help simplify the process.

Check your state’s professional licensing authority to ensure they have current mortgage broker’s licenses in good standing. Also, read online reviews and check with the Better Business Bureau to assess whether the broker you’re considering has a sound reputation.

NerdWallet writer Hal M. Bundrick contributed to this article.

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