Mortgage Brokers

Some home buyers need assistance with getting a first-time mortgage after they have had credit problems. In these cases, a mortgage broker may be the answer to getting through the red tape and getting a decent mortgage rate. Mortgage brokers are individuals or companies that work to bring buyers and lenders together.

Brokers do not lend their own money, but they often have established relationships with lenders who trust their judgement when it comes to a buyer's ability to repay the loan. For the service of walking a buyer through a difficult purchase, a broker receives a fee as part of the transaction. They make sure the borrower completes all the necessary steps and provides the appropriate information prior to the closing.

Mortgage Brokers--What They Don't Do

A mortgage broker does not originate the mortgage. As noted above, brokers do not lend their own money and generally are not licensed to do so. They bring the two parties, borrower and lender, together, and then they are out of the loop. Brokers do not service mortgages once they are made.

During the process of obtaining a mortgage, a borrower can ask a thousand questions and the broker will be available to answer them because he/she does not get a commission until the papers are signed. After the borrower has gotten the mortgage, however, the broker can no longer be involved if more questions arise. The borrower must then deal directly with the lender.