You’ve narrowed down the search to find your dream home in the Pittsburgh, PA and surrounding counties, and now you’re on the hunt for the best mortgage to put those keys in your hand. One way to do it: Work with a mortgage broker who can shepherd you through the lending process from start to finish. Three Rivers Lending has over 25 years of experience in the Mortgage industry and we can almost help everyone purchase their own home.
You’ve probably heard the term “mortgage broker” from your real estate agent or friends who’ve bought a home. But what exactly is a mortgage broker and what does one do that’s different from, say, a loan officer at a bank?
Here are five of the most common questions — and answers — about mortgage brokers.
Three Rivers Lending is a mortgage brokerage that acts as a middleman between you and potential lenders. The broker’s job is to work on your behalf with several banks to find mortgage lenders with competitive interest rates that best fit your needs. Mortgage brokers have a well-developed stable of lenders they work with, which can make your life easier.
Mortgage brokers are licensed and regulated financial professionals. They do a lot of the legwork — from gathering documents from you to pulling your credit history and verifying your income and employment — and use the information to apply for loans for you with several lenders in a short time frame.
Mortgage brokers are licensed financial professionals. They gather documents, pull your credit history, verify income and apply for loans on your behalf.
Once you settle on a loan and a lender that works best for you, your mortgage broker will collaborate with the bank’s underwriting department, the closing agent (usually the title company) and your real estate agent to keep the transaction running smoothly through closing day.
Mortgage brokers are most often paid by lenders, sometimes by borrowers, but never both, says Rick Bettencourt, president of the National Association of Mortgage Brokers. Lender-paid compensation plans pay brokers from 0.50% to 2.75% of the loan amount, he says.
Loan officers are employees of a lender and are paid a set salary (plus bonuses) for writing loans for that lender.
Mortgage brokers, who work within a mortgage brokerage firm or independently, deal with many lenders and earn the bulk of their money from lender-paid fees.
A mortgage broker applies for loans with different lenders on your behalf, shops for competitive mortgage rates and negotiates terms.
You can also save time by using a mortgage broker; it can take hours to apply for different loans, then there’s the back-and-forth communication involved in underwriting the loan and ensuring the transaction stays on track. A mortgage broker can save you the hassle of managing that process.
But when choosing any lender — broker, bank, online or otherwise — you’ll want to pay close attention to lender fees. Specifically, ask what fees will appear on page two of your Loan Estimate form in the Loan Costs section under “A: Origination Charges.”
Then, take the Loan Estimate you receive from each lender, place them side by side and compare your interest rate and all of the fees and closing costs.
That head-to-head price comparison among different options is the best way to make the right choice in what is likely to be one of the largest purchases in your life.