As published in Scotsman Guide's Residential Edition, July 2008.
When someone decides to buy a home or refinance an existing mortgage, the task of getting a mortgage approval begins. For some consumers, this task starts at their local bank. Others do an Internet search.
But most mortgage applicants -- nearly 60 percent nationwide, according to the 2006 Wholesale Access Mortgage Brokers study -- turn to a mortgage broker.
If you believe recent headlines, you may call these consumers crazy for trusting mortgage brokers. Mortgage brokers' reputations have been tarnished because of the outcome of the nonprime boom -- and its ensuing bust.
Brokers, however, are still the best choice for consumers looking for a home loan. As mortgage brokers, it's our job to prove that to them. We can do this by educating them on who we are, how we're different from banks and lenders, and what makes us a good choice for their mortgage needs. We also can enhance our reputations by being part of national and state industry associations.
Who we are
More banks and lenders are now brokering loans, which further blurs the line between lender, banker and broker for consumers. You can explain to your clients and other consumers in your area what makes you, as a mortgage broker, different from banks and lenders.
It helps to point out that most brokers are small-business owners who live and work in the communities with their customers. A mortgage broker may be the local T-ball coach, soccer mom or small-group leader at church. This puts brokers on the front lines with consumers.
A mortgage broker's business operates differently from a bank or lender. A bank can only sell loan programs that its institution is offering at the moment. These days, few banks use their own funds to finance mortgages. They fund most of their mortgages on wholesale lines of credit and not on funds in their vault, so to speak.
When it comes to home financing, though, the days of a one-size-fits-all model are long over. There are dozens of different kinds of loans that meet every kind of need imaginable; there are loan programs for those with near-perfect credit, those with good credit and those with damaged credit, for instance.
Unlike banks that can offer only certain programs, mortgage brokers can sift through the maze of programs and prices from different sources and identify the loan programs for which their clients qualify. This helps the clients make the choice regarding what is right for them. The mortgage-brokerage industry also plays a significant role in the mortgage-lending process and the U.S. economy by increasing competition and driving down costs.
Why we're a good choice
Mortgage brokers often are the first choice for consumers looking for a mortgage. But why do we originate such a large percentage of U.S. mortgages?
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