tion methods for mortgage brokers are not
regulated by any government entity, it is important to note
that brokers can charge whatever they want to for their
services. Of course, since the number of brokers in the
residential real estate market has steadily increased to the
point where it is impossible to count how many there are, a
number of industry standards have formed and become unofficial
guidelines for how and what brokers will charge.
Who Pays The Brokers? Mortgage brokers get paid from multiple
sources, and the most notable and substantial are the borrower
and the lender. Since the broker’s responsibility is to act as
liaison and intermediary between the lender and the borrower,
he is entitled to payment for such services. The borrower will
pay the broker for assisting with completion and submission of
the loan application paperwork, negotiating the best possible
rates and contract provisions with the lenders, and acting as
an independent resource for any and all questions or concerns.
The lender will also pay the broker for assisting the borrower
with paperwork, fielding all questions and concerns, and for
negotiating with the borrower.
The borrower will pay the broker with cash for the loan
application paperwork, and then points for other services
rendered, an amount which will be satisfied at settlement and
added to closing costs. The lender will pay the broker in the
form of a flat commission for bringing new clients to that
organization, plus something called a Yield Spread Premium,
which is the difference between the lender’s required interest
rate and the one the broker convinced the borrower to accept.
Points Paid to Broker A point is equal to 1% of the total loan
amount, and different brokers will charge different amounts of
points, usually based on the complexity of your loan. It is
very important to note that these points charged by brokers for
their services are different from points paid directly to the
lender in exchange for a lower interest rate (called Discount
Points).
It is not difficult to see how working with mortgage brokers
can present some significant expenses and additional concerns
about the cost and quality of a loan. Brokers currently account
for the largest majority of residential mortgage applications,
and present buyers with an option that is very attractive,
provided of course that the broker and his agency are reputable
and experienced.
About The Author:
http://mortgagesanity.com/2007/02/06/mtg-lenders/ – We maintain
a list of reputable mortgage companies on the internet, which is
updated frequently.
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http://www.isnare.com/html.php?aid#133243
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