“How do you get paid?” is one of the most common questions I am asked by new clients, especially those who have never used a mortgage broker before. This blog post was created to answer that question and provide more information on what mortgage brokers do and how we are compensated.
What does a Mortgage Broker Do?
What’s the difference between a Bank Representative and a Mortgage Broker?
A bank representative works for just one financial institution and can only offer the mortgage products of that particular institution. Depending on your particular situation this may or may not be the best option for you.
As an independent mortgage broker, I’m not tied to any one lender or range of products. My goal is to help you successfully finance your home. I start by getting to know you and your home ownership goals. I’ll make a recommendation, drawing from available mortgage products that match your needs, and we will decide together on what’s right for you.
How Do Mortgage Brokers Get Paid?
In the majority of residential real estate transactions my services are completely FREE! If you have good credit and are able to provide full income verification or qualify as a self employed borrower, and I can place your mortgage through a conventional bank or mortgage lender there is absolutely no cost to you. I am compensated through a finders fee by the lender based on the mortgage amount. You are never charged anything upfront and I only get paid when your mortgage goes through.
When Could I Be Charged A Fee?
If you’re a borrower that fits outside the box of what traditional lenders or banks offer there are alternative financing options. These options include, but are not limited to, private financing, credit repair mortgages and Equity/No Income Qualifying type mortgages. Theses alternatives sometimes come with slightly higher interest rates and possible fees from the lender and/or mortgage broker. Any fee that is charged is fully disclosed in writing and you are never required to pay any fee upfront.
How Much Does A Lender Pay Me?
When I am compensated by lender through a finders fee, the fees paid by lenders are fairly standard throughout the mortgage industry. Finders fees are based on the mortgage amount and term chosen. The longer the mortgage term the higher the compensation. Since compensation is similar between lenders you can be assured there are no conflicts of interest in placing you at a particular lender.
Do You Get Incentives To Place Me With A Specific Lender?
Some lenders do pay additional incentives based on my efficiency and volume with that particular lender. This can come in the form of additional bonuses, points or rewards. This isn’t something I particularly pay attention to when finding the right lender for your mortgage. The mortgage industry is constantly changing and I prefer to keep up to date on policy changes and products rather than which lender will give me a free toaster.
When deciding on a lender we’ll discuss what’s important to you in regards to the terms and conditions of the mortgage and I’ll ensure you’re getting the best rates and terms for your particular situation and not the most points in my pocket.
If in the end if I am receiving additional compensation for placing your mortgage with a lender this is fully disclosed to you when we are signing your mortgage paperwork.
If you have any questions about this, or would like to sit down and discuss applying for a mortgage, please feel free to contact me anytime! I would love to talk with you.