Why lender referrals are good for homebuyers

Become a personal finance expertSubscribe to our thrice-weekly personal finance newsletter that makes you smarter about your money.Digging into money maneuvers that feel sus.I recently met a new pal who’s navigating the real estate market for the first time. (Godspeed, prayers, et cetera.) She was ready to submit an offer, but raised an eyebrow when her mortgage broker recommended she work with a specific lender. “It felt like a scam,” she told me. “Like the broker was getting a kickback from the lender or something!” I get it: The world of real estate is murky enough to make anyone a little paranoid. But working with a broker’s preferred lender isn’t a scam. In fact, it’s a very common practice with some solid benefits for buyers. Curtis Wood, the founder and CEO of AI-based mortgage app Bee, told Money Scoop that most agents and brokers refer clients to preferred lenders in part because preferred lenders often provide exclusive low rates. “They also need to have faster underwriting turnaround times, good support—that sort of thing,” Wood explained. But do brokers get kickbacks from preferred lenders? No—per the Real Estate Settlement Procedures Act, agents legally can’t receive bonuses for lender referrals. “Mortgage brokers are only paid based on the loan amount,” Wood told Money Scoop. So there is a real incentive for us to generate customer loyalty. A real incentive for us to match you up with the lowest mortgage rate that we can find.”So, while working with your mortgage broker’s preferred lender isn’t sus, keep an eye out for *other* red flags during the home-buying. process. Don’t get me started on escrow wire fraud. 😱 — Lillian

Leave a Comment

Your email address will not be published. Required fields are marked *