A licensed mortgage broker has a specific and essential job to do.
Their job is to effectively shop around the real estate financing market to find the buyer the best mortgage rate, at the best terms possible.
Usually a broker comes in before the home buyer actually goes looking for their dream home.
Buyers should first go to a broker for a mortgage pre-approval.
Most (if not all) financial lenders offer a mortgage pre-approval, and this document is normally free for prospective home buyers.
This mortgage pre-approval is crucial to the home buyer as it tells them what they can actually afford and details the limits to which they can borrow from the financial institution.
A mortgage broker is of added value in this situation as in the time it takes a home buyer to meet with one particular lending institution, the mortgage broker can contact a number of quality banks on the buyers' behalf.
A broker understands that different banks have different rules, and as they know the market; the mortgage broker in effect 'goes shopping' for you to find the best rate.
Even though using a mortgage broker is often free for the potential home buyer, their value and necessity should not be overlooked.
A mortgage broker makes their commissions from the financial institutions where they secure; while there are no fiduciary responsibilities to the home buyer, a mortgage broker's business is almost always based on referrals; it is important for a mortgage broker to act in the best interests of his or her clients.
Securing mortgages and positive client referrals are the backbone of a mortgage broker's success.