A mortgage broker is a financial services professional that specializes in connecting commercial and residential real estate buyers with the best rates available from various lenders. Roughly 20% of mortgages go through a broker, a number that has been growing steadily over the years thanks to the unique benefits brokers offer to buyers.
The benefits of a mortgage broker are centered around three main areas: convenience, wider access, and expertise.
Mortgage brokers handle a lot of the legwork for buyers, including shopping around for different rates, analyzing finances and loan suitability, ensuring paperwork is completed and in order, and negotiating for the best rate. That saves an enormous amount of time and headache, especially for first-time buyers new to the process.
Shopping for mortgages online is extremely easy these days, which can lead some buyers to think a broker is unnecessary. Despite the number of lenders that offer online quotes, not all lenders can be accessed directly by retail customers. Mortgage brokers often have access to a wider pool of lenders, which means in some cases, they can find better rates that retail customers just don’t have access to on their own.
Mortgage brokers are experts in real estate financing. Their knowledge and experience enable them to guide buyers who might be thinking too big or too small, or who don’t understand the realities of what their finances or the industry will allow. This makes the process go smoother and helps ensure that buyers don’t accidentally bite off far more than they can chew — by taking on a loan that they may qualify for, but will make them house poor and put an extreme strain on their financial wellbeing.
How Do Mortgage Brokers Differ from Banks?
Choosing to go with a mortgage broker is very different than working with an advisor at a bank for a number of reasons. The first and most obvious reason is that the bank’s advisor works for the bank, and the mortgage broker doesn’t. Beyond that, the mortgage broker offers some major benefits that in-house bank advisors can’t match.
For one thing, the bank only has access to their own rates, and those rates may or may not be competitive with other banks or even non-traditional lenders. Another benefit is that the mortgage broker has an incentive to find buyers only the best possible rates, an incentive the bank doesn’t really have. The bank will not just offer up the best rate right off the bat. Buyers going to an in-house advisor at a bank will need to be prepared to negotiate, while buyers that work with a mortgage broker will find there is zero negotiation required whatsoever. This benefit offers a level of comfort that makes a mortgage broker an easy decision, especially for people who find negotiations awkward.
How Does a Mortgage Broker Get Paid?
The primary way mortgage brokers get paid is through a small one-time commission on loans they close. That commission generally ranges from 0.5% to 2.0%, which is small, but nothing to balk at when it comes to loans in the hundreds of thousands or even millions of dollars. That fee is paid by the lender, which means there is generally little to no cost involved on the buyer end – a big motivating factor. While the one-time fee is the most common payment structure, some brokers also use trailer fees, which see them earn a lower commission upfront in exchange for an ongoing commission every year for the duration of the loan. Finally, some lenders offer brokers bonuses as an incentive to send them more business. That’s a tricky subject, because while additional revenue sources are a good thing, a broker who gains a reputation for prioritizing certain lenders at the cost of their clients’ well being could potentially lose a lot of business in the long run.
What Technology Does a Mortgage Broker Use?
Like all industries, the mortgage game is now heavily tech-based. Mortgage brokers benefit from many of the same Fintech systems consumers do, like online quote tools and calculators, but there are also some more specialized tools they use, like loan origination software (LOS) and customer resource management (CRM) systems.
Loan Origination Software
Loan Origination Software, or “LOS” systems are platforms designed to integrate directly with lenders to allow brokers to manage the entire application and approval process online. They offer tools to streamline each step of the loan origination process, from pre-qualification to application to processing to underwriting to decision-making to final filling. These powerful tools speed things up, lower costs, and increase a broker’s capacity.
Customer Resource Management Software
Much like an LOS system, mortgage CRM software is designed to bring as much of a mortgage broker’s operations as possible into a single point of control. While an LOS focuses on the application process itself, a CRM focuses on all of the customer-facing aspects of a broker’s business, including lead management, relationship building, marketing, service, and more. That makes the two systems powerful compliments for one another, and brokers should always look for an LOS that can integrate easily with their CRM platform.
CRMDialer, the mortgage industry’s leading customer resource management platform, includes:
- An advanced lead management system to streamline customer acquisition
- A built-in power dialer to make high-volume calling faster and more effective
- A complete communications suite including email integration and SMS messaging
- Built-in scheduling tools and Gmail and Outlook calendar integration
- A fully functional auto-responder to enable better email marketing
- A private label helpdesk system to enable faster, higher-quality service
- No limits on users, lead and customer accounts, or documents stored
…and much more.
If you’re looking at getting into the mortgage game and are thinking about putting CRMDialer to work, start your no-commitment free trial today to see everything the mortgage industry’s leading CRM can do for your new brokerage.