Before you advise your buyers to call a big bank or online retail lender for their home loan, consider that working with an independent mortgage broker—experts who specialize in home loans and are rooted in your community—can ensure your buyers reach the closing table quickly with the best rates available and personalized service throughout the entire process.
If you—or your buyers—haven’t considered working with a local mortgage broker, consider these three factors that protect their best interests throughout the home buying journey.
Disclosed and Upfront Fees
It should be no surprise that taking out a home loan involves a number of fees. While there are always costs associated with loan origination (running a credit check, application, escrow, appraisal, etc.), independent mortgage brokers will disclose this information so your buyer is not caught off guard. By comparison, online mega retail or direct lenders hide their fees within higher rates and discount points so be sure your buyers are looking closely at their Loan Estimate, or better yet, have a local independent mortgage broker review it to evaluate the additional savings they could provide.
Capped Compensation Limits
Current laws and restrictions put a limit on a mortgage broker’s compensation, while mega retail lenders, big banks and direct lenders are able to exceed what a mortgage broker can make, thus costing your buyer more money at closing or a higher rate. In fact, mortgage brokers are not allowed to make more than 3%—although most lender-compensation plans pay from 0.5%-2.75% of the loan amount. It’s important to note that the compensation package brokers receive depends largely on the home price and the competitiveness of the local market. For example, large cities or coastal regions may only have a 0.5% fee.
Licensed Within State and Federal Guidelines
Independent mortgage brokers follow strict guidelines that are regulated by both state and federal institutions, while mortgage bankers at big banks are only required to take a federal test, not an individual state level test. Mortgage brokers know the rules and regulations within their licensed state(s). In addition, mortgage brokers are required to take a 20-hour class that covers state and federal regulations, loan officer ethics, originations, and more. Then, they must pass the SAFE Mortgage Loan Origination Test which is administered by the National Mortgage Licensure System (NMLS).
Mortgage brokers are also required to complete training each year to stay up-to-date on changing regulations. In addition to these tests, the CFPB, HUD, FHA, and Federal Housing Finance Agency all help regulate mortgage brokers and their practices. As a result, mortgage brokers are well-trained experts who are best equipped to advise you and your buyers.
Find the Right Financing with Your Local Independent Mortgage Broker
If you’re still unsure if you should partner with an independent local mortgage broker—don’t be. Independent mortgage brokers are embedded in your community and have the flexibility to shop around for the right loan product and rate that best suits your buyer’s needs. And, they’re the most qualified experts to help guide them throughout the home loan process.