Many people often end up getting confused between mortgage lenders and mortgage brokers. A lender is a person or institution that actually provides you with money. A mortgage broker is the person who will offer you the products and services provided by the lender. The primary job of mortgage brokers is to find the right lenders and plans to meet your needs. Conventionally, all the financial institutions and banks have not taken the help of a broker and only have their service by themselves. However, the competition has increased a lot in recent times. These brokers are paid by the lender, and as a result, you don’t have to pay them anything for their services.
Work done by a mortgage broker
The type of work a broker has to do varies greatly by jurisdiction. For example, if you are in the UK, anyone offering mortgage brokerage will need to comply with the rules for managing a financial business. That means that since you are offering advice to people, you have to make sure that the borrower can find a bank that is suitable for his or her needs. If the advice given turns out to be faulty, the broker will be responsible. But then there are several other jurisdictions where the role of a broker is more like a sales job where the role is to guide the borrower to a lender.
Typically, a broker will be involved in marketing to attract clients. The broker also evaluates the borrower’s history and this includes looking at credit history and affordability which are verified through tax reports and income related documents. After this, the broker will review the various lenders they have contact with and try to find the one that best suits the borrower’s needs. Once this is done, the broker will also gather all the required documents, fill out the application form required by the lender, and also explain the legal aspects related to the process. The main job is to make sure that your clients can save as much money as possible out of the whole deal.
Difference Between a Loan Officer and a Broker
As you’ve seen above, a mortgage broker is essentially a channel between the lender and the borrower. A loan officer on the other hand works for the lender. A mortgage broker is licensed by the state and is also responsible for any fraud related to the loan. A loan officer on the other hand works under the legal umbrella of the lender. Loan officers must be registered with the NMLS, but are not required to be licensed.
In today’s world it can be a very demanding task to find a lender that offers you everything you need. That is why it is better to take the help of a mortgage broker because they have numerous contacts and are much more knowledgeable in the industry.