Back in the “old days,” people would usually only go to a mortgage broker when they weren’t able to find a mortgage on their own (self-employed, past bankruptcy, bad credit, insufficient income, etc) – they had usually been turned down by a bank, and needed the help of a mortgage broker to obtain financing. The mortgage broker would arrange financing through an alternative lender or private investor, and would then charge the client a brokerage fee for his/her services.
A couple of decades ago, many of the major financials institutions realized it was much cheaper to pay someone to bring them qualified mortgage clients rather than having a branch on every corner, with costly overhead (not to mention the high expense of training and maintaining staff). So many banks and lenders started paying finders’ fees to mortgage brokers for qualified mortgage applications.
Today, many mortgage brokers do not charge their clients many (if any!) fees for a standard mortgage transaction, and instead rely solely on finders’ fees for their source of compensation. It’s never a bad idea to ask a mortgage broker up front how much they charge – but in most cases, the advice and the help from a mortgage broker will usually cost you, the client, absolutely nothing (and, in many cases, will probably save you thousands of dollars!!!).
