Mortgage Brokers 101

What you need to know about working with a broker

What is a mortgage broker?

A mortgage broker, like UW Funding, is essentially a middle man between lender and borrower. Our job is to liaise between the funding source – whether that be a bank, a wholesale lender, a credit union, or a different source of funds – and you, the borrower. Your broker should always represent your best interests: it’s our objective to find the ideal loan to suit your needs.

Why use a mortgage broker?

Mortgage brokers do a lot of the home loan heavy lifting, taking weight off your shoulders as well as off your lender’s. It can be intimidating, time-consuming, and confusing trying to get quotes from different lenders on your own – and that’s where brokers come in. Most brokers already have their own networks of lenders, so they’re not starting from scratch like you might be on your own.
These networks give brokers an awareness of what’s available in the market at any given time – often as well as lower-than-market rates. This makes the process of finding the best loan for you simpler and more efficient. Plus, the less work a lender has to do close a loan, the better a negotiating position you and your broker are in. Ultimately, the idea behind using a broker is to save time and money.

Will a mortgage broker find cheaper loans?

It’s quite likely that a mortgage broker will be able to find you a cheaper loan that you’d be able to find yourself in the retail market. That’s largely thanks to those aforementioned networks that brokers typically have. At UW Funding, our loans come from wholesale sources – which essentially means that our interest rates are low compared to banks. (And you can learn more about just how that works here.)

How do mortgage brokers get paid?

Mortgage brokers get paid a few different ways: most commonly, they get a percentage of the loan amount from the lender for bringing that lender the business. Brokers can be paid by the borrower instead – and interest rates vary between these two different options. It’s good practice to ask your broker what your interest rate and loan costs would be for each of these scenarios, so you can choose what works best for you. If you have plenty of spare cash, it might be worth paying your broker yourself and locking down a lower rate – or if you don’t, it might be better to roll that extra cost into the mortgage by way of a slightly higher rate. 

How exactly do mortgage brokers differ from loan officers?

There is a key difference between a mortgage broker and a loan officer: a broker works for you, while a loan officer works for a funding source, like a bank or credit union. Brokers typically utilize multiple funding sources, but they aren’t employed by any one of them. Loan officers, on the other hand, are tied to lending from one funding source – by which they are also employed. That’s probably why more home loans in the United States are originated by mortgage brokers than by banks or anybody else.

Mortgage brokers work with you to find the most suitable loan at the best price. They can save you both money (by sourcing cheaper loans) and time (by doing the heavy lifting for you), and they should always work in your best interests. If you’re looking to buy a home or refinance, get in touch with us at UW Funding today.