The Secret Life of Mortgage Brokers

You already know that mortgage brokers come in a variety of flavours, and that some of them have gotten a bad rap recently. You’re also aware that they provide an important service: obtaining mortgages that your bank is unable to provide.
To better understand how mortgage brokers can help you, you should first learn how they work and how they are compensated. You may want to check out Kansas City Mortgage Broker for more.
Mortgage Brokers at Work
When you get a home loan from your neighbourhood bank, there might only be one player involved: your neighbourhood bank. Portfolio lenders are banks that originate and hold on to a home loan. Many banks, on the other hand, do not keep the loans they originate. They benefit from selling the loans. They can directly sell your loan to another lender or sell it to a wholesale buyer.
To put it another way, many banks operate like mortgage brokers.
The procedure is as follows: you approach mortgage brokers to obtain a loan. When they have your credit ratings, down payment (equity), and loan number, the first thing they do is see if Fannie Mae (Freddie Mac) can buy your loan and under what conditions.
It’s all done on a machine. Your broker enters your details into the system, and the system responds with one of two options: you qualify or you don’t. Actually, it gives you figures and percentages, such as how much you can borrow, what interest rate you’ll get, and how much the broker will make.
Mortgage brokers are compensated in a variety of ways (Usually)
This is where the fun begins. Brokers are given three different income levels to choose from. Which means they make less money if they give you the lowest interest rate you qualify for, and more money if they give you a higher rate.