When you are in the market for a new home, you have an important choice to make when searching for a mortgage loan. The decision is whether to deal with the lender directly or to use the services of a mortgage broker. Some people might not be aware of what a mortgage broker does and how using their services can benefit borrowers. The following article looks at this important financial issue.

Function

A mortgage broker is an intermediary whose job is to find loans for borrowers looking to purchase a property. Unlike loan officers, mortgage brokers do not work for institutions that lend money. They work with a wide range of lenders in order to secure the best mortgage for their clients. For example, while a bank loan officer can only offer you a mortgage from that specific bank, a mortgage officer might be working with 30 lenders or more. This is an obvious advantage to borrowers because it gives them many more choices.

License

You can feel comfortable dealing with a mortgage broker because each state requires them to be licensed due to federal law. Although the licensing requirements vary from state to state, typically they need to pass a standardized test known as the Secure and Fair Enforcement Licensing Act (SAFE) exam. Educational requirements and background checks are also common. The bottom line is that you can feel confident that you are working with a trained professional when using a mortgage broker.

Credit Issues

Some borrowers looking for a mortgage have credit issues that make obtaining a mortgage difficult or even impossible. It's both frustrating and time-consuming for a borrower to go around to individual lenders looking for one willing to lend to people with imperfect credit scores.

Fortunately, mortgage brokers have experience with clients who have credit issues and can find lenders who are willing to work with these types of borrowers. For instance, if you have credit problems that are making securing a mortgage difficult, a mortgage broker might find a lender willing to grant you a mortgage under certain conditions, such as paying a higher down payment.

Fee

Mortgage brokers typically charge about 1 to 2 percent of the amount of the loan. Sometimes the borrower pays the fee. In this case, you will either pay the fee at closing or the loan will be increased to cover the fee. The fee could be paid by the lender in some instances, although the lender will cover the fee through the loan.

To learn more about finding a mortgage that is right for you, consult with a mortgage broker in your area.