by Craig Romero

There is a new kid on the block in the game of mortgage lending, and they go by the name of upfront mortgage brokers.

What does this mean to consumers looking to buy a home or refinance an existing mortgage? It means the rules of the mortgage lending game have changed, and for the better.

Upfront mortgage brokers are bringing borrowers a fresh, new way to go about getting a home loan or refinance a mortgage. With traditional mortgage brokers, borrowers pay a premium but normally do not realize it. This is because the premium is rolled into the quote they receive from the broker when they are discussing their mortgage needs.

While a conventional mortgage broker is in the business of providing a service to borrowers, they think of themselves as more of a salesperson providing borrowers a product, and they view their fees as a normal markup in the process of doing business.

Upfront mortgage brokers see themselves as more of a service provider. The borrowers are their clients, and as such, the upfront mortgage broker has the best interests of the borrower in mind. Rather than hiding their fee from the borrowers, the upfront mortgage broker plainly discloses the costs of their services. The upfront mortgage broker discloses the wholesale cost of the loan to the borrower, and the borrower pays the broker the discussed fee as payment for getting them the loan at that rate.

So what does this mean for borrowers? Now borrowers have the option of paying a broker to get a wholesale mortgage or refinance rate. Since the brokers fees are paid up front by the client, the broker passes on any third-party rebates back to the borrower, rebates that conventional brokers may decide to keep for themselves.

The next time you’re looking to purchase or refinance a home, you may want to make an appointment with an upfront mortgage broker. With a “what you see is what you get” way of doing business, and an honest and ethical approach to mortgage lending, it should be a refreshing and low-stress experience.

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Written by Craig Romero/Mortgage Analyst

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Craig Romero is an author and mortgage analyst dedicated to helping homeowners maximize the investment in their homes.