A residential broker helps originate residential mortgages. The residential broker may be a third party independent broker, such as a mortgage broker or banker. The broker may also work for a specific mortgage company.
An independent agent or broker works with a client to evaluate his financial situation. He may help the client determine what type of mortgage he can afford based on the client's debt-to-income ratio, annual income, credit score and the amount of money the client has set aside for his down payment. The broker can also explain different types of mortgage financing available to the individual, such as a 30-year fixed rate mortgage, an adjustable rate mortgage, or a balloon mortgage. The broker can explain the benefits and risks of each type of mortgage and can help the individual decide which type of mortgage is best for him.
The residential broker who acts as an independent agent can then shop around for different mortgage companies to provide the mortgage to his client. He usually establishes a network of mortgage companies and banks he is familiar with and works with on a routine basis. He then compares interest rates, qualification requirements and terms to help find the best deal for the client. If the client has bad credit, this can be a more complicated process since he will need to find a mortgage company that will allow the individual to qualify despite the imperfect record.
A residential broker who works for a bank does many of the same tasks as far as explaining the types of mortgages and the qualification requirements. A broker who works for a set bank, however, cannot help the client shop around for mortgages. He can only explain the types of mortgages his particular bank offers and help the client determine which of those is best, which he can afford, and whether or not he can qualify.
The benefit of hiring a residential broker is the broker helps a buyer through the mortgage process, which many buyers are not familiar with. The broker can also help prepare closing documents and papers that must be signed before the mortgage is granted. Most often, brokers are paid on a commission basis only when the client finds a mortgage, is accepted and when the deal closes. The brokers are usually paid by the bank, although the cost is passed on to the consumer through closing costs and/or an added cost of the loan.
