One of the most common questions among buyers who are considering their funding options is, “How do mortgage brokers get paid?”. Sadly, a lot of people are under the mistaken assumption that financial incentives could impede these professionals from making fair and unbiased recommendations for either loan are lenders. In reality, however, this simply isn’t true. Reputable, ethical brokers such as those at Mortgage Hero abound and there are countless ways in which these professionals can assist you with the funding process. The following is everything you need to know about the compensation they receive and the way in which this compensation affects the services supplied.
Mortgage Brokers Are Not Loan Officers
Loan officers work directly for banks. As a result, they tend to have access to a very limited array of funding products to promote. When working with a loan officer, you will have to choose from a selection of mortgage loans that are specific to the lender that the loan officer works for. The loan officer will either be compensated through a regular and agreed upon salary or he or she will receive a hefty commission for each one of the funding products that he or she successfully promotes. Some loan officers may even receive a combination of these two forms of payment, with the bank issuing both a salary and commissions on all bank product sales.
Conversely, a mortgage broker works independently and is licensed independently. This means that when you work with brokers, you will have access to funding products from multiple lenders along with many different mortgage loan types. Having access to a greater variety of funding options will give you the best ability to find loan terms and features that are best in line with your purchasing goals. Moreover, given that your provider will not be wholly reliant upon commissions or forced to meet a set sales quota for his or her employer, this professional can give you unbiased information of all the available funding options that you’re qualified to receive along with a comprehensive outline of the benefits and drawbacks of each. The ultimate goal of the mortgage broker is to help people make informed funding decisions by exposing them to top-tier financial solutions and giving them knowledgeable tips on how to qualify for these products.
So How Do Mortgage Brokers Get Paid?
As independent professionals, brokers get paid for their services by the lenders in mortgage loan transactions. Their fees typically represent just one to two percent of a loan’s total value. Given that this amount does not wildly vary from one lender or loan product to the next in any specific transaction, brokers have far greater motivation to represent funding products indiscriminately. Their payments will be relatively equal in every instance and thus, their sole aim is to satisfy their clients so that they can generate sufficient word of mouth advertising and a positive reputation for assured, future success.
Why A Broker Will Work With Your Needs In Mind
Loan officers have the comfort of knowing that the reputations of the lenders they work for will always attract more clients. Brokers, however, have to work constantly and diligently to forge positive reputations of their own. It simply isn’t in their best interests to push specific funding products solely in the interests of obtaining higher commissions. If they want to succeed in this field, they must establish reputations for helping investors achieve long-term success and financial health as property owners.
Another impressive advantage that you gain by working with a knowledgeable broker as opposed to a loan officer is access to a far greater knowledge base. Many loan officers only maintain a comprehensive understanding of the mortgage loans, terms, and features that are supplied by the lending institutions they work for. Brokers, however, are constantly exposed to a far more expansive array of mortgage loan options and can therefore tell borrowers more about these products in general including why certain loan terms are more agreeable and cost-effective than others. Value-oriented consumers who are interested in diligently shopping the funding market for the absolute best mortgage loans generally work with brokers. These investors have the greatest likelihood of saving money and of getting maximum value from the funding solutions they choose.