All You Need to Know About The Role of a Mortgage Broker

A mortgage broker is someone who acts as an intermediary between borrowers and mortgage lenders. Simply put, mortgage brokers do not control the lending guidelines, timeline, or end of a loan application. Instead, calgary mortgage broker are licensed professionals who can advise you on things to address on your credit history and in your finances… but only after they have independently verified your income and debt loads. Brokers are usually associated with either a bank, a mortgage company, or a mortgage broker. While some mortgage companies may hire brokers directly, most mortgage lenders will delegate the responsibility for loan origination and approval (lender loans and underwriting) to mortgage brokers and sometimes even offer a discount to mortgage brokers when a borrower signs a mortgage contract with a specific lender.

Terminology And Loan Provisions

The primary duty of a mortgage broker is to perform credit and mortgage loan applications in a timely fashion. As such, a mortgage broker must keep up with the various forms of lending, which often come in the form of loan applications, loan offers, and mortgage terms and conditions. Mortgage brokers also have access to loan programs offered by lenders and are familiar with the terminology and loan provisions of these programs. However, there are instances where a mortgage broker is not allowed to solicit specific programs from specific lenders – for example, if a mortgage broker is not authorized to qualify or sell certain programs through a particular lender. As an example, if the lender’s underwriting rules prohibit the mortgage broker from qualifying a specific program, the broker may not be able to apply with that program.

Lending Programs

Many mortgage brokers have their lending programs, while many mortgage agents participate in a mix of general-purpose and mortgage brokers. As such, mortgage agents can help homeowners obtain mortgage loans by working closely with these lenders and brokers. Some examples of general-purpose mortgage brokers are independent mortgage brokers who work across state lines, as well as national mortgage brokers who can work with borrowers in any state. On the other hand, mortgage agents can be licensed through the State Licensing Board to conduct business in specific states. These mortgage agents may not necessarily offer specific programs but may instead refer the homeowner to a lender that does offer specific programs.

Mortgage Broker Company

To qualify for loan financing through a mortgage broker company, there are several components required. First, there is the mortgage brokerage qualification, which involves completing a mortgage brokerage application with one or more banks. For this application, a borrower must provide a borrower’s Social Security Number, income information, employment history, credit score, and other financial information. Borrowers who meet the mortgage broker qualifications may be eligible for up to 100% mortgage financing through the banks. If the mortgage broker is working with a bank rather than an independent lender, he or she may be required to complete additional lender documentation, which could increase the borrower’s risk and costs.

The Loan Inspection

An independent mortgage broker’s evaluation of a loan is based on a thorough examination of a loan and its current market value. There are many instances where a mortgage broker will skip a bank inspection to make a referral to a particular lender. A bank that is not represented by a mortgage broker has no way of knowing what conditions a loan officer is considering when making a referral. When a bank uses a broker to provide loan inspection services, it is only using the expertise of the broker to approve or deny loans and is not privy to the exact loan conditions that would be reviewed by a bank inspector.

The Referral

Finally, the mortgage brokerage is the referral. The mortgage broker may use his or her investment expertise to convince a borrower that a specific mortgage product or refinancing program is the right one for them. However, when a mortgage broker refers a borrower to a lender for a mortgage brokerage service, this is considered a regulated direct transaction. Because the mortgage broker is working in a regulated profession, he or she is required to follow specific rules and regulations. While the mortgage broker may be knowledgeable and experienced in his or her area of expertise, this does not mean that he or she can advertise any other type of mortgage product or service outside of that which he or she is already licensed to provide.