Should you take help of a mortgage broker?

A mortgage broker is an individual who helps you to take out a mortgage. A mortgage broker plays an instrumental role in the mortgage market but he can also push a borrower into a dungeon. Just as a mortgage broker can be very helpful in the home buying process, he can also inflict financial injury. The recent subprime mortgage crisis occurred due to irregular lending practices and the mortgage brokers were a party to it.

Reports suggest that the mortgage brokers had manipulated income levels and made borrowers forge documents so that they could qualify for a bigger mortgage loan. As a result when borrowers were given a mortgage loan, they continued to make monthly mortgage payments but started falling behind on payments after couple of months.

What are the tasks performed by a mortgage broker?

The mortgage broker has an important role to play and some of the prominent tasks of the mortgage broker are as follows –

1. The mortgage broker will take care of marketing activities to get as many clients as possible.

2. Evaluating the borrowers’ financial condition, assessing the borrower’s credit rating, income verification and affordability is taken care of by the mortgage broker.

3. Another very important role played by the mortgage broker is to customize mortgage products so that they can meet the needs of a borrower.

4. Pre-approval procedures are also taken care of by the mortgage brokers.

5. Gathering different documents like bank statements, pay stubs or pay slips etc is the work of a mortgage broker.

6. The broker will assist the borrower to complete the lender application form.

7. The legal disclosures are explained by the mortgage broker

8. Finally the broker will submit the application form to the lender so that the mortgage loan gets approved.

Of late many reputed real estate companies are reluctant to involve mortgage brokers. This is because they believe that the mortgage brokers do more harm than good. However, not all of them are dishonest and for few dishonest mortgage brokers the honest ones have to face the wrath too. Even banks are refusing to lend money to consumers that are clients of mortgage brokers. This is because majority of the consumers think that mortgage brokers work not for you but for themselves. Consumers have also been complaining that the banks change their rules related to loans very frequently. Quoting a mortgage broker “If you want to get ripped off, go to a broker, and if you want in competency go to a bank”.