Buyers – Using A Mortgage Broker May Leave You Dead In The Water

If you are thinking about using a mortgage broker for financing or have already been approved through a mortgage broker, you may dead in the water and without a new home come settlement day. And to add insult to injury, you will most likely be in default and may lose your earnest money deposit.

First of all…what is a mortgage broker? A mortgage broker is a company that does not lend their own money. Instead, they outsource the loan to direct lenders who actually have the money and fund the loan. Examples of direct lenders are Wells Fargo, First Horizon, National City, SunTrust and CitiMortgage.

The part of the direct lender that deals with mortgage brokers, gives final loan approval and funds the loan is called the wholesale division.

So why may using a mortgage broker leave you dead in the water come settlement day? Because more and more direct lenders are closing their wholesale divisions and not going through with funding broker's loans even if the loans have already been approved and are supposed to close in the near future.

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