Consumer FAQ's
Why should I use
a mortgage broker?
Studies show over 50% of Americans use mortgage brokers for
financing. Brokers provide consumers with choice, convenience
and experience. The consumer receives an expert mentor through
the complex mortgage lending process. The broker offers the
consumer extensive choices and access to affordable home
loans while balancing the consumer's financial interests
and goals.
Have more Americans been able to buy homes because
of mortgage brokers?
Yes! Mortgage brokers have been pioneers in the "subprime" credit
market, using innovative loan packages to allow low to moderate
income borrowers, with less than perfect credit histories,
to start enjoying the benefits of home-ownership.
Does the mortgage broker really care about the quality
of the loan itself?
Yes, absolutely. The safety and soundness of the mortgage lending
community is directly linked to the success and integrity of
its home loan originations. Furthermore, mortgage brokers represent
the single largest residential origination source today, emphasizing
that they play a significant role in the mortgage loan process.
These numbers highlight the fact that consumers who exercise
their choice, choose mortgage brokers; most likely because
brokers are dedicated to their customers: consumers, wholesale
lenders, and ultimately, American taxpayers.
Do brokers work for the lender they are selling my
loan to or me, the consumer?
Neither. As an independent contractor, the broker allows wholesale
lenders to cut origination costs by providing such services
as preparing the borrower's loan package, loan application,
funding process, and counseling the borrower. Brokers help
keep loan rates low due to their minimal overhead and setup
costs. Furthermore, the broker will seek the loan which best
suits the borrower's financial circumstances, needs, and goals.
From the consumer perspective, with rare exception, the broker
does not get paid unless and until the loan closes. Thus, the
broker has the ultimate incentive to provide the best possible
customer service to the consumer.
Isn't the broker supposed to get the best deal for
the consumer?
Since mortgage brokers offer the products of many wholesale
lenders they often have the best selection. This question presumes
that anyone can know what is "the best deal". While
many would consider "the best deal" to mean "the
lowest rate," a loan program with a very low interest
rate may not be the best choice for a consumer with limited
cash, if that rate comes with high points and fees. A 15-year
loan may save a borrower tens of thousands of dollars in interest
payments over a 30-year loan, but the higher monthly payments
may not be acceptable to the consumer. So, "the best deal" for
any consumer depends on his or her individual circumstances,
needs, and goals.
Today over half the nation's mortgages are originated
by mortgage brokers. This clearly indicates that consumers
are choosing the superior options, service, and expertise offered
by mortgage brokers. Brokers have forced retail lenders to
compete with other loan sources driving down costs nationwide.
Don't brokers "steer" consumers
to the lenders who pay the highest fees to the broker?
While isolated instances of adverse steering can occur, the
mortgage brokerage industry has predominantly armed consumers
with a free-market economy weapon: open and vigorous competition.
Any consumer exercising his or her basic right to shop and
compare, will ultimately find the loan options that are in
his best interests. The combination of government-mandated
disclosures and vigorous competition has presented today's
consumer with unprecedented levels of choice. While price is
an important consideration in advocating a specific wholesale
lender, brokers also make their professional recommendations
based on a number of other factors which include the lender's:
-
Reputation for service
-
Underwriting criteria
-
Ability to close the
loan on time
-
Compliance with consumer's requirements