What’s the difference between mortgage brokers and mortgage bankers? Mortgage brokers serve as a liaison between mortgage lenders and borrowers. Mortgage brokers work directly with the bank or finance company to fund the loan. On the other hand, mortgage bankers use their own funds to complete a loan transaction and then sell the loan to the lender they’re working with.
“There really is no advantage to using a broker as opposed to a mortgage banker,” says Victor Benoun, a mortgage broker based in Studio City, Calif. “We both work with various sources of lending, whether it be insurance companies, banks. So we both have access to the same types of funding sources.” The choice between using a mortgage broker and a mortgage banker is entirely up to the borrower.
Mortgage brokers are usually paid in points. A point is 1 percent of a mortgage loan. If you take out a $100,000 dollar mortgage and pay one point on it, your mortgage broker receives $1,000 dollars. Today’s mortgage brokers aren’t putting a lot of padding on their bills, Benoun says. When you search for a mortgage broker, it’s important to find someone you can trust.
“In the same way you would shop around for a real estate agent, this [mortgage broker] is representing your best interests in your biggest debt you’re probably ever going to have,” Benoun says. “Shop around, so it’s not just a question of interest rate. Do you trust the person that you’re actually going to work with to get the job done?”
Ask for mortgage broker recommendations, Benoun suggests. You’ll want a mortgage broker who has a good track record and who knows the ins and outs of the business.
Benoun also recommends shopping for a mortgage broker face-to-face. He says each mortgage loan scenario calls for different circumstances. “You really seldom have a textbook moment.” When shopping for a mortgage broker on the Internet, you don’t get a quote that’s tailor-made just for you, and when it comes to a mortgage, you want the best fit possible.
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