What is a Mortgage Broker?

March 12, 2019 Facebook Twitter LinkedIn Google+ Resources

You’ve decided to buy a house and go with a Mortgage broker — great! Though, you’re not sure what a Mortgage broker is…exactly. First a little history about the industry.

Forms of Mortgage brokering has been around for centuries and is not a new or revolutionary idea. What has changed is the way that people pay that borrowed money back. The idea can be traced back to England around the 12th century and usually came in the form of land-owner/individual loan transactions. This was hard of course and a considerable idea for not many people had the money up front to purchase property.

The mortgage industry took several shapes over the next few hundreds of years and was shaped by major global events. Concepts and practices like amortized periods, loan insurance, down payments and partially-amortized payments started improving the security of the lender and borrower.

As you can tell from above, this century old industry has been improving their lending practices to ensure that both parties can be confident in entering this transaction.

A mortgage Broker is an independent professional and (more modernly) certified agency. They act an intermediary between yourself and the lending institution. Mortgage brokers get to know their client’s financial history and find the institution that is the right fit. Therefore, your personal financial situation and credit score come into consideration here and the rates that your broker can acquire are usually reflective of your credit history and financial stability.

Most mortgage brokers require a fee and typically charge a flat rate for time and experience to lower future problems between broker and borrower. This isn’t a practice that all mortgage Brokers provide, but it is one you can search for.  The flat rate is by far one of the best perks of choosing to get a mortgage through a broker instead of a bank.

You might be wondering why there is so much competition between Banks and Mortgage brokers. A possible reason could be that Banks are beholden to a much stricter corporate structure whereas the Mortgage brokers have much more flexibility when interacting with you. Clients usually get a personalized experience and that is something the bank can’t really offer. Getting a one-on-one with a client is important but maintaining and developing that trust and relationship through the mortgage lending process is always evolving. That’s what mortgage brokers get right.

The application process is also made simpler and the industry jargon laid simple. The Mortgage agent will help guide you through the seemingly complex pre-approval phase, the negotiation and the prospection of new homes.

Customizability with the industry securitization process put together to help you, the home-buyer, feel safe and secure when getting these services. Competitors to the industry simply can’t offer that degree of service.

It’s also incredibly important to know that mortgage broker strictly acts as a representative on your behalf with the lending agency and is not the one who is being repaid. The Mortgage broker collects a fee while you the client pay the loan back to the institution itself at the negotiated rate.