Mortgage brokers have come back and created competition for mortgage bankers over the last few years. While bankers still dominate the home loan industry, employment in the mortgage broker industry has nearly doubled since 2011. But if you’re looking for a home loan, which should you work with?
Knowing the structure of mortgage brokers versus bankers is important for understanding which is right for you. Mortgage brokers function as sellers for many direct wholesale lenders at the same time, looking for the lowest cost loan for which the potential customer is eligible for. Mortgage bankers, on the other hand, employ loan officers and sell only their own company’s products. They want to get you into a program with their company as opposed to finding the lowest cost deal for which you are eligible among many direct wholesale lenders.
How mortgage brokers and bankers get paid can also be instructive. Mortgage brokers are paid an origination fee by the borrower or a yield spread premium from a wholesale bank, while mortgage bankers are paid by servicing your loans themselves, collecting principal and interest each month, or selling the loan and servicing rights to another firm. This is called a service release premium. Click here to learn more about brokers versus bankers.
Mortgage brokers also are required to purchase mortgage broker bonds in order to legally conduct business. These surety bonds guarantee that the mortgage broker will operate in accordance with the applicable government rules and regulations.
Where can you instantly purchase mortgage broker bonds?
Colonial Surety offers the direct and digital way to obtain a mortgage broker bond. We are the insurance company — which means no agent, no broker, and no middleman. The steps are easy — get a quote online, fill out your information, and enter your payment method. Your bond will be available instantly. It’s that simple!