Mortgage Brokers Demystified

If you're looking for a mortgage, you may want to look for a mortgage broker first. There are plenty of ways to get mortgages -- banks, credit unions, savings and loans, and mortgage bankers, among others -- but you can also get set up with one via a mortgage broker. In exchange for setting up a mortgage, most lenders charge origination fees, whereas mortgage brokers charge a broker's fee (and are sometimes compensated by the lenders they work with, as well). More than half of all mortgages in America originate with mortgage brokers.

Depending on the fee they charge and the kind of deal they can get for you, mortgage brokers are sometimes your best bet. They have access to a wide variety of lenders and programs, and they can be especially helpful if your credit history is checkered, or if you have any other special circumstances.

Should you go with a mortgage broker or not? It depends. See what your alternatives are, and go with the best deal you can find. It may well be with a mortgage broker. It's smart to do a bit of research before talking to mortgage brokers, though. You'll delay any hard sell, and you'll be more informed as you listen to them. Make sure you learn about all of the fees involved before making any decisions.

You can learn all about how to buy or sell a home in our Home Center, which features lots of money-saving tips and even some special mortgage rates. As you shop around, you may want to look into lenders such as Countrywide Financial (NYSE: CFC  ) , JPMorgan Chase (NYSE: JPM  ) , U.S. Bancorp (NYSE: USB  ) , Bank of America (NYSE: BAC  ) , Washington Mutual (NYSE: WM  ) , or Wells Fargo (NYSE: WFC  ) .

You can also learn a heck of a lot about mortgages and mortgage brokers at The Mortgage Professor's website. (Much to my surprise, when I stumbled onto this website, I discovered that the Mortgage Professor is actually a former professor of mine, Jack Guttentag!) I found Guttentag's innovative "Upfront Mortgage Broker" (UMB) program particularly interesting. If you're shopping for a mortgage broker, see if the ones you talk to will agree to work as a UMB.

Home in on further Foolishness:

• Buying a House Is Easy!
• So You Want to Be a Landlord?
• Make Money as a Landlord
• A Mover's Survival Kit
• 10 Things to Know About Mortgages
• 10 Home Enhancement Tips
• The Buying or Selling a Home message board

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