What Is An Independent Mortgage Broker?

Many home buyers choose to obtain pre-approval for a mortgage loan before making a purchase offer on homes for sale. By getting pre-approved for a loan, a buyer is able to determine the limit on how much can be paid for a home. If you are interested in obtaining a loan to purchase a home, you may want to consider using the services of an independent mortgage broker.

Mortgage brokers serve as intermediaries between lenders and individual home buyers. The role of an independent mortgage broker is regulated at both the federal level and the state level. There are practical reasons why a mortgage broker might be able to find a better mortgage option than a loan officer at a bank.

Access to multiple lenders

A mortgage broker is not beholden to any particular mortgage lender. You have probably noticed how advertised interest rates can change on a frequent basis. The fees to originate a mortgage loan are likely to vary by lender. The advantage of using a mortgage broker is that you may be able to minimize the overall cost of interest and fees.

Cost considerations

The drawback to using a mortgage broker is that there is a separate charge for the service. The fee charged by a mortgage broker is usually included as a closing cost. Before requesting the services of a mortgage broker, make sure that you understand how their fees are to be paid. If the extra cost cannot be justified, you may want to stay with a traditional loan officer.

Mortgage originator designations

There is sometimes a bit of confusion about the terminology used to describe mortgage originators. Federal law requires independent mortgage brokers to be registered through the Nationwide Multistate Licensing System (NMLS). Mortgage loan officers at most banks are also required to register with the NMLS. As a result, you may see your local loan official described loosely as a mortgage broker.

Remember that there may be other mortgage providers available to you. Check with any credit unions in your area to see what kind of mortgage programs they offer. A local community bank might be able to provide a more attractive mortgage plan than the large regional and national banks. In recent years, several online mortgage lenders have garnered a portion of the mortgage market.

The key to finding the best mortgage option is to shop around. If you lack the time, the use of a mortgage broker may be the best way to remain abreast of market trends. Contact a real estate firm for more information on the many sources of mortgage funding.