One of the great things about our business is the frequency we’re asked the question “what does a broker cost?” It’s great because that gives us a chance to deliver a rather surprising answer for most people: a mortgage broker doesn’t cost the buyer one single dime!
So how does a broker make money then?
A broker provides buyers with expert knowledge about lenders throughout the industry. A broker recommends specific lenders depending on your financial situation, risk tolerance, and other key financial factors and the lenders are very happy to have business referred to them and therefore the broker receives payment from the lender side of the equation.
Think of it like this, when you ask a clerk at the grocery store where to find a bottle of soda, they’ll hopefully point you to the correct aisle.
The grocery store takes care of the clerk’s wages, rent on the store, utility bills, business licenses, the soda supplier’s invoice, and so on. You don’t worry about any of those things, you simply pay what’s listed on the price tag of that bottle of soda.
A mortgage broker is like a freelance clerk, completely willing to answer your questions about products (i.e. mortgages) at any of the grocery stores (i.e. lenders) in the neighborhood.
In a nutshell, using a mortgage broker does not cost you a thing but does provide you with a considerable advantage with respect to understanding your options, shopping around for the best rates, and making sure your financial objectives are being met.