Mortgage brokers
A mortgage broker acts as anintermediary who sources mortgages on behalf of individuals or businesses.Traditionally, banks and other lending institutions have distributed their ownproducts. However as markets for mortgages have become more competitive, the role of the mortgage broker has become more popular. Today in most developedmortgage markets (especially the U.S., UK, Australia, Spain and Canada)mortgage brokers are the largest distributors of mortgage products for lenders.
However, given the critical nature of the mortgage broker's role, a greatnumber of consumers are now seeking out the services of Certified MortgagePlanners, industry experts that work in concert with Certified FinancialPlanners to align consumers' home finance position with their larger financialportfolio(s). A common myth about mortgage broker and a loan officer exists. Amortgage broker is normally registered with the state, and personally liable(punishable by revocation or prison) for fraud for the life of a loan. A loanofficer is typically not liable for their actions, and instead works under thelicense of their current institution. Typically, they have less experience inthe field. Mortgage brokers also do charge a nominal fee for their services rendered.
Why does one requirea Mortgage Broker:
In competitive mortgage marketsmany lenders use an array of rate offers and other incentives to attractcustomers. To many consumers, due to their infrequent purchases of mortgage products, the mortgage market may appear confusing and somewhat daunting. Amortgage broker can guide them through the process of selecting a suitable mortgage and offer mortgage and property related financial advice. Forborrowers with poor credit records, or other unusual circumstances, finding alender may be difficult. A mortgage broker, having specialized knowledge andmultiple lending sources, will normally be a valuable resource in obtainingfinancing. They also provide tailor made proposals for the clients by sittingaround with the mortgage lenders and discussing in detail about the clientsrequirements.
Responsibilities of Mortgage Broker
The nature and scope of amortgage broker's activities varies with jurisdiction. For example in UK any oneoffering mortgage brokerage is offering a regulated financial activity; the broker is responsible for ensuring the advice is appropriate for the borrowerscircumstances and is held financially liable if the advice is later shown to bedefective. In other jurisdictions the transaction undertaken by the broker maybe limited to pointing the borrower in the direction of an appropriate lenderand no advice given. Therefore the work undertaken by the broker will depend onthe depth of their service and liabilities. Typically the mortgage brokersoften undertake the following tasks:
1. Assessment of the borrowers circumstances. This may include assessment
of credit history (normally obtainedvia a credit report) and affordability
(verified by income documentation).
2. Assessing the market to find amortgage product that fits the clients needs.
3. Applying for a lendersagreement in principle (pre-approval).
4. Gathering all needed documents(pay stubs / pay slips, bank statements, etc.),
5. Completing a lenderapplication form.
6. Explaining the legaldisclosures.
7. Submitting all material to thelender.
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