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Monday, November 25, 2013

Pros and cons of using a mortgage orginator

Mortgage origination allows for loan comparison
Mortgage originators find loans
Mortgage originators play a major role in originating mortgage loans / bonds and assisting prospective borrowers in finding the best mortgage loan/bond.

What services do mortgage originators offer?

• Assist you in finding the best mortgage loan / bond for your particular circumstances
• Provide advice on mortgage loan rates and mortgage products and lenders in the market
• Ensure that all documentation required by banks / mortgage lenders are completed correctly reducing any possible delays due to missing information etc
• Provide guidance as to how much mortgage loan / bond you could qualify for
• Liaison with banks and mortgage lenders ensuring a quick turnaround in the approval process.

How are mortgage originators paid?

Mortgage originators get paid commission by banks / mortgage lenders for each successful application that they refer. The commission paid by the banks averages 2% of the mortgage / bond amount – the actual amount varies from bank to bank.

Using the services of a mortgage originator does not add to the costs of the bond as banks have been able to reduce costs in their home loans divisions thanks to mortgage originators doing a lot of the back office administration themselves. So it’s a win –win scenario for everyone, the banks reduce their costs, the originator earns commission and you get the best mortgage deal.

Be wary of using the services of a mortgage originator who charges a raising fee in addition to the commission paid by the bank / mortgage lender.

Advantages of using a mortgage originator

• Less paperwork, many mortgage originators submit the applications electronically to the banks / mortgage lenders
• Apply at more than one bank / mortgage lender
• Quicker turnaround time in the approval of mortgage loans / bonds
• Cash back / reduced bond registration, many innovative originators provide a cash incentive or a reduction in your registration costs.

Pitfalls to avoid in dealing with a mortgage originator

Mortgage originators can make the mortgage application process much smoother, however there are still unscrupulous operators masquerading as mortgage originators and the following pitfall should be avoided.

• Deeds of sale that force you to use the mortgage originator/conveyancer specified by the developer/agent. Insist on appointing your own mortgage originator.
• Be wary of originators that charge a raising fee, mortgage originators earn commission from the banks and shouldn’t charge you an additional fee for their services.

In summary, a mortgage originator finds the mortgage loan that is most suitable to the needs of the borrower and also takes care of the many administrative and form filling tasks involved in the mortgage loan application process. That is what you are paying them to do, mortgage originators earn a commission from the bank, however you as the client always end up paying. Be wary of mortgage originators, who charge a fee in addition to their commission, this practice is unethical. Remember that only applications with a high success rate of being approved will be send by the mortgage originator to his processor.

About the author: David works for a financial services provider that can find you a find you a personal loan online. Their product also includes a 24 month legal and ID assist plan plus a credit status report.

Image license: Nikcname, CC BY 2.0


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