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When we get right down to it, the only obstacle that most people really encounter when they want to purchase their dream home is funding. Not all of us will be lucky enough to have spare cash lying around for purchasing a house anytime we want. And this is why mortgage loans are very important.
Unfortunately, applying for a mortgage can be downright stressful, and there’s always the 50% chance that you might not get approved for the loan amount you need. But what if there was a way you could better your chances? What if there are professionals out there who can tailor-fit the ideal mortgage loan for you?
Today, we’re going to discuss mortgage loan consultants and why hiring one might make your home purchasing journey less stressful and more convenient. We’re going to talk about the difference between mortgage brokers and loan officers so that you can be better informed about the services they offer.
If you were looking to learn how to make your loan application much easier, you’ve come to the right place!
Is a mortgage consultant the same as a loan officer?
Mortgage loan consultants are sometimes referred to as mortgage brokers and even mortgage advisors. But whichever term they are called as, their jobs are basically the same. They can help you apply for a mortgage by connecting you with an appropriate lender after reviewing your finances, credit history, and credit score.
A mortgage loan consultant usually works freelance, but they can also work for specific companies that offer mortgage services. They are not to be confused with a mortgage loan originator. Although they work in quite the same way, a mortgage loan consultant does not originate loans, unlike a mortgage loan originator.
As the terminology implies, you can approach a mortgage loan consultant to get advice about the best home loan to get in your situation. On your behalf, they can then shop around for lenders who can offer you the best deal if they don’t already know the best lending institution to approach.
Once a deal is struck, either the borrower or the lender pays the mortgage loan consultant a 1 to 3% commission (based on the home loan amount) at closing. Sometimes, you don’t even have to pay a loan consultant if a deal is not put on the table. However, as this is a case-to-case basis, you have to make sure to learn your loan consultant’s terms before you get any advice.
On the other hand, if you plan on shopping around for mortgages on your own, the people you’ll be speaking to will be a mortgage or bank loan officers.
Unlike loan consultants, mortgage loan officers work for specific lending companies and are thus limited to offering you the definite mortgage deals that their employers offer. Instead of helping you find the best mortgage according to your financial capability, they will only be able to give you a positive or negative result for your application.
How much does a mortgage loan consultant make?
If you’re interested in helping people sell their houses, you might want to become a real estate agent. And if you are interested in helping people realize their dreams by helping them afford the house they want, you might want to become a loan consultant.
The Bureau of Labor Statistics does not have a particular entry for mortgage loan consultants, but they do have data on mortgage loan officers as well as real estate agents. And since all three basically belong to the real estate industry, we can presume that the ballpark salary of a loan consultant will fall somewhere in the same range. According to the Bureau of Labor Statistics, real estate agents had a median pay of $51,220 in 2020, while a loan officer’s annual income was pegged at $63,960. It’s safe to say that if you were to become a mortgage loan consultant, you might expect to earn at least $50,000 annually.
However, as with any sales profession, salaries really depend on how much work you can receive on the job. As you grow in experience and expertise, you can also expect to earn much higher in this industry.
How does one become a mortgage consultant?
The training for mortgage brokers never really stops, but to become one, to begin with, here are the minimum requirements.
1 – Have a high school diploma
The good news is you don’t need to wait until you graduate from a university before you can earn as a mortgage broker. A high school or General Educational Diploma might suffice. However, you should still seriously consider taking classes in business administration, accounting, and finance to augment your earning potential and give better advice to your clients.
2 – Pass the test
Mortgage loan consultants are licensed professionals, so you cannot enter this business without obtaining a license. And the first step towards achieving this is passing the Nationwide Mortgage Licensing System exam. They call this exam the SAFE Mortgage Loan Originator Test that will grill you on the business’s best practices and state and local regulations. You need to score at least 75% to pass.
3 – Register through your state’s licensing authority
Before you get licensed, you still need to get yourself registered with your state. The requirements and fees vary depending on the state where you plan on practicing. You might need to decide if you want to establish an online company or a brokerage with a physical office.
4 – Get your license
Becoming a licensed mortgage broker basically means that you have paid a bond so that future clients can get government protection in case you don’t abide by the industry’s best practices. The amount you will need to pay will also depend on your state’s requirements and your unique financial history.
Take note that your mortgage license is something you need to keep current, so you need to keep up your training to get licensed every year.
Why should borrowers hire loan consultants?
Some people forgo hiring advisors for fear of additional costs. While it is true that clients will most likely need to pay up for hours rendered by their hired loan consultants, the fees will typically amount to just 3% of the mortgage loan amount maximum.
Loan consultants are generally hired for the convenience they can bring in the mortgage loan process. Instead of personally shuffling to and from different banks and offices, borrowers can rely on their advisors to speak to lenders on their behalf. Mortgage applications involve a lot of paperwork that needs to be signed, filed, and double-checked, and having a paid professional do the job for you can give you peace of mind knowing that no stone is left unturned.
The longer the loan consultant’s career, the much more fruitful their built relationships in the industry. You can take advantage of this as they acquire the best deal for you at a lending institution. There’s less need for you to research and learn more about the market when you can rely on your advisor’s expertise. However, it is still recommended that you spend time learning about the process before you dot the i’s at closing.
Believe it or not, even if you still have to pay your mortgage consultant for the assistance they give, you can still end up with savings even when you’ve started paying your mortgage. Think about this. The mortgage industry is more about what you know than the number in your credit report. There can be good deals just around the corner that you might not be aware of, even if you had a higher than average FICO score. While most of us might not be able to afford the amount of time needed to know the inner workings of the mortgage industry, consultants, by their very need to be licensed annually, cannot stop their education and must keep taking courses to update their built-in knowledge.
Mistakes you commit as a borrower can also be costly! It can be easy to fixate on the interest rates of mortgages despite the many other factors that need to be considered. Having a consultant at your side as you read the fine print can provide you with protection to be sure that you will be putting your money in the right place.
Whether you ultimately decide to hire a mortgage consultant or not, the decision to choose which mortgage deal will completely rest on you.
According to the Consumer Financial Protection Bureau, almost half of people do not bother to get an offer from a second lender even when doing so might have afforded them many savings.
The main advantage of hiring a mortgage consultant is the assurance that you will see the bigger picture. Instead of limiting yourself to a few opportunities, you can get a whole world of them so that you get what you only rightfully deserve.
As you wade through the waters of the mortgage experience, feel free to get advice from people who have experience. Everybody needs help sometimes, and it will be in your best interest!