If you are looking to purchase a new home, you should be ready to experience a time full of home tours, shortlists and memories. However, if you are new in this field, you may find it hard to get a mortgage.
You may not have the time to get in touch with different lenders, check details and apply for a mortgage. In this case, it’s better that you contact a mortgage broker for assistance. You should know a few basic things before you work with a good professional. The first question is, how do home loan brokers get paid? We are going to answer this question in detail.
What do Mortgage Brokers do?
To finance your purchase, you may contact a bank or a loan provider. Since a bank is just an institution, it can offer a lot of loan options. Therefore, it may not be able to meet your needs.
On the other hand, if you contact a mortgage broker, they can offer a lot of loan options from a lot of lenders. The role of these professionals is to look for the best mortgage rate based on your needs.
For instance, if you need to buy a house but you can’t pay more than 5% of the house price as down payment, the remaining amount will be covered by your mortgage loan. Your mortgage specialist can find a lender that can agree to these terms.
With this type of specialist, you can easily look for a lender who is ready to provide you with the money you need to buy your desired house.
How do Loan Brokers get paid?
First of all, it’s important to keep in mind that these brokers are not bank employees. They are independent workers with proper licensing. Therefore, they get paid in the form of service fees. The payer of this fee can be you, the lender or the borrower.
Typically, this fee is a percentage of the total loan amount, which can be around 2%. The dollar amount is paid upfront or made part of the loan.
Although the commission is only 1% to 2% of the amount, it can be a lot of money for the broker. Based on the number or size of the loan, the fees may vary. However, the good thing is that there are no hidden fees.
The good news is that loan brokers are required to reveal all the fees before they sign a contract. Therefore, you will have to pay only the amount disclosed by them. Aside from this, each fee must be listed on the document. You can ask the broker about all the fees and the purpose they are given on the list.