What Does an Independent Mortgage Broker Does?
Working for a large bank or even a small mortgage company? Think about making the leap to a wholesale lender or loan originator as an independent mortgage broker instead. Discover the advantages of being an independent mortgage broker and why so many local, independent mortgage agents are the perfect solution for anybody looking to buy a house or refinance an existing mortgage loan. From here you’ll learn how buying on the cheap can be a reality for even the most financially stretched homeowner!
One of the main things that makes working with independent mortgage broker wholesalers appealing is that these lenders work in pretty much the same way as their large bank or other similar lending institutions. They are in the business of creating and distributing loans to people who need them. In fact, many of these companies will actually have a loan officer on staff that acts as an assistant to the broker by handling loan applications and negotiations.
The reason for this is to make sure that the clients’ needs are met through the entire loan process. After all, a good broker will know that no two customers are exactly alike and thus should take care to match each client’s loan needs with a lender that is capable of providing that kind of service. While some lenders do provide their customers with one-stop shopping, many will turn their customers’ home loan application over to a mortgage broker who has connections to multiple different lenders. What this means is that, if one customer goes with a lender who turns that application down, the independent broker can still receive payment from the lender for his or her services.
This type of arrangement between brokers and lenders is common among independent mortgage brokerages. What happens here is that the broker goes through the loan application process with a number of different lenders, but then chooses which lender to represent for each loan. Since each lender has different loan products, their fees will vary. It stands to reason, therefore, that the broker’s representation will be more profitable if he or she is able to secure the loan from a lender that will turn out to be a more lucrative one for his or her client. When the final decision is made as to which lender to represent, the broker makes his or her commission based on the money the client paid to the lender to complete the loan.
So what happens if a mortgage broker ends up representing a lender whose products are not right for the client’s needs? Often times the broker will recommend another lender. The reason for this is that the client’s needs will not be represented well by the first choice. Sometimes it’s the money the client has to spend; sometimes it’s the lack of experience with the different products the lender offers.
In either case, the independent mortgage broker will have to find a new lender who is going to do business with the borrower. In order to do this, he or she must do the research. The research starts with the loan originator, who is the person in charge of finding the lender who is going to be most profitable for the client. This research extends to each lender and the websites they use to advertise their products. The research also includes learning what the lender’s reputation is in the wholesale channel. Knowing this background helps to narrow the list down to one or two lenders who will likely be a good fit.
Once the list of possible wholesalers is down to just a couple, the research continues with the research of each of the individual lenders. Each of the potential lenders is going to have its own strengths and weaknesses. For example, some mortgage brokers work only with lenders who take 30 day payments. In other cases, the clients must know if the potential lender is able to get the loan processed quickly. All of the information that the independent mortgage broker needs to make a good referral decision is going to be gathered during the loan process. This includes talking to the lender, the customer service department, and even getting information on the loan application itself.
After narrowing the field down to just a few wholesalers, the next step for the independent mortgage broker is to find out what each of these lenders have to offer. As with the loan originators, the brokers should do the research online as well. They can check out the websites of the different lenders and identify their strengths and weaknesses. Then they can develop a plan to talk with the specific lenders to develop a good referral system.