How Does a Mortgage Broker Make Money? By M Yassir

A mortgage broker works on your behalf to look for a number of good deals on real estate projects to select from. They provide you with the best deals in the market. When selecting a loan, many people don't prefer seeking the help of a mortgage broker. The broker has many links to the lenders in the market. In spite of sticking with only one lender, brokers have access to all lenders in the market. In Australia, 40% of borrowers applying for a mortgage loan, hire the services of a professional mortgage broker.

Mortgage brokers have more importance in countries like US, UK, Australia, Canada New Zealand and Spain due to established mortgage markets.

How do they make money?

Mortgage brokers work on the basis of commission. They don't charge anything from the borrowers or their clients. Yet, they are paid by the lenders or banks. As being professionals in the market, the broker works like an agent for the lender. They are hired by lenders to sell their mortgage products to the borrowers. That is why they are not paid by the borrowers; instead they receive money from the lenders. Brokers decide themselves for the charges they are going to earn from the lender. They basically earn from loan origination fee, processing fee or yield spread premium. In some cases, they might charge from the borrowers.

Basically brokers work on the basis of points on every loan. These points refer to a percentage. For example, in a loan amounting to $100,000 with 8 % interest rate, the broker may charge 1.5 points as their fee or commission. This 1.5 points means that they are charging 1.5 % fees on the principle amount of loan.

With huge number of lenders and mortgage providers in their directories, brokers are able to provide better deals with a bank. They provide information of mortgage loans from different banks. Although, there is negativity of choosing a real estate broker, they may over charge you with high interest rates to get more commission form the bank.

It is always a wise decision to hire the services of a professional real estate broker in order to minimize losses on real estate projects. Consult from your friends, family members and colleagues to find out reliable brokers for all of your real estate deals. Your loved ones would provide you with genuine, unbiased and real opinions that would ease your searching process.

Choosing a property is one of the most important decisions taken in life. Mortgage brokers need to be chosen only after thorough market research