What is the Role of a Mortgage Broker?

A Home Buying Article Contributed by Elizabeth Fox-Wise

Is the Mortgage Broker Worker As Your Agent?

A mortgage broker can operate under two very distinctly different roles; either as an agent to the mortgage seeker or as an Independent Contractor. Which role the mortgage broker plays in the mortgage application process can have significantly different effects on the service provided.

There are some mortgage brokers who market their service to consumers where they will operate as your agent in the mortgage application process. As your agent, they are working for you, and you alone. With the main objective of the business relationship being to obtain a mortgage for you with the best possible terms and interest rates, that is their only objective. Therefore, they are much more likely to deliver to you the product (in this case the mortgage) that you are expecting.

However, finding a mortgage broker who operates as the consumers agent, is not always an easy task. That is because the majority of mortgage brokers work as Independent Contractors.

A mortgage broker who works as an independent contractor usually has an ongoing relationship with various mortgage lending institutions. As an independent contractor, the mortgage broker is working on behalf of the consumer who is seeking the mortgage, as well the mortgage lender.

Unless the contract you sign with the mortgage broker states clearly that he is functioning as your agent in the mortgage application process, it is not always safe to assume that the mortgage broker will seek the best available mortgage for you.

Make Sure You are Clear on the Mortgage Broker Fees

If you get your mortgage through a mortgage broker, you can expect to pay fees for the service. How these fees are distributed and how much they are will vary from one mortgage broker to the next. Make sure that you have, in writing, any fees that will be charged for the broker service.

Some mortgage brokers will charge a fee up front and other times it is paid from the mortgage money borrowed. Remember, if the fee is added to the mortgage that means you will take a larger mortgage and, of course, will be paying interest on the broker fee.

Sometimes mortgage brokers fee is paid by the lender and passed to the mortgage seeker in the form of increased interest rate or more points paid.

However the broker fee is paid, local and federal law does regulate the maximum amount that can be charged. Typically, a mortgage broker fee should not be more than 3% of the mortgage amount.

The Mortgage Broker Helps Through the Application Process

A mortgage broker who works as your agent is beneficial to the mortgage seeker to ensure that you get the best rate available. But not all mortgage brokers work as your agent.

However, not matter how a mortgage broker works, as either an agent or an independent contractor, there is another advantage to the consumer for using his service. Help through the mortgage application process. If you have never applied for a mortgage before, a good mortgage broker can make the application process easy by walking you through ever step of the way.