How Mortgage Brokers Are Compensated

A mortgage broker is a person who will work with a variety of lenders in an effort to get you the best deal on a home loan. The key benefit of working with a broker is that you get to see more of the options available to you in the marketplace. However, it is important to know that they are often paid a percentage of the loan that you obtain by the lender.

What to Know About Lender-Paid Compensation

When lenders pay a mortgage broker, it is referred to as lender-paid compensation. This amount varies from .5 percent to 3 percent of the loan amount. Typically, the fee has an inverse relationship to the size of the market where the mortgage is originated. In cities where homes are more expensive, the broker fees are generally closer to the low end of the scale. In cities where homes are less expensive, the fee may be closer to the federal cap.

What Is Borrower-Paid Compensation?

While this is rarely the case, it is possible that you will be asked to pay your broker a fee to help you obtain a loan. The rate will likely be the same as the one that the lender typically pays. However, there is a chance that it could be lower, and there is also a chance that you can negotiate the price paid to the broker. As with any other service provider that you use, it is a good idea to shop around before choosing a broker.

Brokers May Help Save Money Overall

The best Las Vegas mortgage brokers and those in your local area may help to save you money in the long run. This is because they may be able to find loans with the lowest down payments and other assistance that will help keep your home purchase within your budget.