Mortgage broker

From ArticleWorld

A Mortgage broker is one who, for a fee, brings together a borrower and lender, and handles the necessary applications for the borrower to obtain a loan against real property by giving a mortgage or deed of trust as security. A broker arranges financing for borrowers with a variety of lenders. Mortgage brokers themselves do not make the loan but receive payments for their services. The mortgage broker may also handle collections and disbursements. Another name for mortgage brokers is loan brokers.

Need for a mortgage broker

Some lenders do not like to deal directly with borrowers; they only go through mortgage brokers. This is because borrowers generally find the mortgage market highly confusing and complicated and need to depend on mortgage brokers to guide them through the process of buying mortgages and give them financial advice. Some consumers are clueless as to the availability of lenders and require brokers to lead them to the correct persons.

The business of brokerage

The nature and scope of the work of a broker depends upon the jurisdiction of the area within which he operates. A typical mortgage brokers services may include many or all of the following:

  1. showcasing his /her services in the market;
  2. appraising borrower’s capacity to pay off loans;
  3. appraising the market to find a lender and a borrower that match each other;
  4. collecting papers required for the deal;
  5. filling and completing forms;
  6. giving financial advice to both parties concerning the contract; and,
  7. handing over all the necessary papers concerning the deal to the mortgagee.

In different states

In the US about 20,000 broker negotiated deals are carried out in a year and over 80% of loans against homes are collaborated with the help of brokers.

In Canada the mortgage broker jurisdictions are dependent on regional laws. In most Canadian towns, the jurisdiction is based on the common law practices but in Quebec the civil law applies in all deals concerning real estate.