From saving you money to saving you time, mortgage brokers are an important part of the mortgage process. The right broker makes finding and securing loans as painless as possible while simultaneously staying in close contact with potential lenders. Before you find the perfect mortgage broker for your needs, you should know a few things.
How do mortgage brokers get paid?
Contrary to common assumptions, mortgage brokers do not work for banks. Instead, they operate as free agents and are licensed to work in the field. This might not seem like a significant difference, but it impacts how they are paid. Most notably, some brokers are paid by lenders while borrowers pay others.
Mortgage brokers receive a percentage of your loan amount as payment for their services, typically 1% to 2% of your total loan amount on average. Fees can vary depending upon a few different factors, but it is important to know that you should receive a fee breakdown up front.
Who pays mortgage brokers?
Many mortgage brokers are paid by the lender. This means that they do not get paid unless your mortgage is secured and signed. Sometimes borrowers are required to pay instead. The fee amount can generally be paid upfront or added to the loan.
Legally, mortgage brokers generally cannot be paid by both the lender and the borrower. The Dodd-Frank Act, instituted after the financial crisis of 2007/2008, also prohibits them from charging you hidden fees or tying their payment to your loan’s interest rate. Be aware of your rights as you move through the mortgage process.
Are you interested in learning more about how mortgage brokers impact your loan amount and interest rates? Reach out to our experienced team today!
