A lot of people often end up getting confused between mortgage lenders and mortgage brokers. A lender is a person or an institution that actually provides you with the money. A mortgage broker is the person that will offer you the products and services provided by the lender. The main job of mortgage brokers is to find the appropriate lenders and plans to suit your needs. Conventionally, all the financial institutions and banks have not taken the help of a broker and have sole their service by themselves. However the competition has increased a lot in recent times. These brokers are paid by the lender and as a result you do not have to pay them anything for their services.
Work done by a mortgage broker
The type of job that a broker has to do varies a lot with the jurisdiction. For instance, if you are in the UK then anyone offering mortgage brokerage will have to comply with the rules of running a financial activity. That means that since you are offering advice to the people and that is why you should ensure that the borrower is able to find a bank appropriate to his/her requirements. If the advice given turns out to be defective then it is the broker who will be held responsible. But then there are various other jurisdictions where the role of a broker is more like a sales job where the role is to guide the borrower towards a lender.
Usually a broker will be involved in marketing in order to attract clients. The broker also assesses the history of the borrower and this includes analyzing the credit history and affordability which are verified through tax reports and income related documents. After this the broker will go through the various lenders it has contacts with and try to find out one that best suits the borrower's needs. Once this is done the broker will also gather all the required documents, complete the application form required for the lender and will also explain the legalities pertaining to the process. The main job is to make sure that their clients are able to save as much money as possible from the entire deal.
Difference between a loan officer and a broker
As you have seen above a mortgage broker is essentially a channel between the lender and the borrower. A loan officer on the other hand works for the lender. A mortgage broker is licensed by the state and is also liable for any fraud related to the loan. A loan officer on the other hand works under the legal umbrella of the lender. Loan officers have to be registered with the NMLS but there is no need for them to be licensed.
In today's world it can be a very demanding task to find out a lender that will offer you everything that you need. That is why it is best to take help of a mortgage broker because they have numerous contacts and are much more knowledgeable about the industry.