A mortgage broker plays a key role in mortgage lending. A Mortgage broker melbourne is usually an independent intermediary that links to mortgage lenders and potential mortgage borrowers together, but who doesn’t use their personal funds to provide mortgage lending. Instead, a mortgage broker searches out the best possible match in terms of the client’s individual financial situation, credit rating, interest rate and income requirements. The mortgage broker provides the mortgage lender with information on what potential borrowers may be eligible for, as well as information regarding the cost of the loan. This information allows the lender to make an informed decision regarding the loan and whether or not to approve it.
Mortgage brokers do not directly give mortgage loans. They are not for loan officers, and they do not prepare the application process paperwork nor do they submit the forms to the bank. Instead, a mortgage broker serves as an intermediary between the lender and the potential borrower. The borrower fills out an application form, which the broker provides to the lender, and the lender reviews the application and sends back the appropriate documents to be reviewed by an underwriter. The final decision about whether or not to approve the loan rests with the underwriter.
The primary benefit of using a mortgage broker is that he can shop around for better rates. Mortgage brokers receive periodic reports from mortgage lenders that show their interest rates over the course of a year. With this information, the broker can find good deals that would suit the borrowers’ individual circumstances. Mortgage brokers have relationships with several different types of mortgage lenders, and often times the lender will send the recommended interest rate to the broker as opposed to having the borrower to make the request directly. Because these relationships create a level of leverage for the mortgage brokers, they are able to negotiate better rates on mortgages for their clients than the individual lenders would. In turn, the borrowers save money since the total cost of a mortgage is lower when made through a mortgage broker than when made directly with the individual lenders.
Another benefit of mortgage brokers works for the lender. Because brokers have relationships with a large number of lenders, the middleman has access to a wide variety of offers. This means that the lender is less likely to pass up a good deal because it is not presented to the full range of possible borrowers.
Yet another benefit of mortgage brokers may be hidden, but can have a strong impact on the quality of a loan. Brokers often recruit their employees from banks and other financial institutions, making the employees knowledgeable about the loan process and the industry in general. This knowledge gives them an advantage over other potential loan applicants, allowing the banker to present a loan application with more confidence.
One final benefit of mortgage brokers is that he is often not required to provide the same customer service that an actual person would provide. Since the broker works only on commission, he does not have to worry about providing personalized service to individual customers. This does mean that the lender cannot offer the same personal touch that one might find if they were dealing with a live person. However, when a customer does go through a broker and find the best rates, the personal service may be well worth the cost to the customer.