Four lenders will all take my call. What is the broker adding on top of that

Your description of how they get paid is close but the part that matters is on the disclosure, not in the conversation. Ask each broker for the compensation section in writing before you give anybody a credit pull. Lender-paid comp is a percentage of the loan amount set by an agreement between the broker and that lender, and it's built into the rate you're quoted, so a zero-fee broker is not free, the cost has moved. Borrower-paid comp shows up as a line item you can see and negotiate. Both are legitimate. What you want to know is whether the broker's comp changes depending on which lender they place you with, because that's the only version where the incentive points away from you. Disclosure requirements and broker licensing rules vary by state, so confirm what applies where the property sits, and get the numbers in writing rather than over the phone.

One thing that surprised me while I was working through the licensing side is how much of a broker's value is just knowing the current credit box, which moves constantly. A lender that bought 1.10 DSCR files in the spring can be at 1.20 by the fall with no announcement. You calling four lenders gets you four snapshots of today. A broker who submits forty files a month has a rolling picture of who's tightening. That's the piece you can't reproduce by dialing. Whether it's worth a point on a clean rental purchase is a different question, and on a clean file I'm honestly not sure it is.

meridian, what did the four quotes actually differ on besides rate. When I did this I found the spread on rate was tiny and the spread on everything else was enormous, prepayment structure, whether they'd count short-term rental income, how they treated my self-employment, reserve requirements. One lender wanted twelve months of reserves and another wanted three. That's the number that decided it for me, not the quarter point. If your four quotes are genuinely identical on terms then you've done the shopping and a broker is adding less.

The credit union that won't take broker files is the whole answer for a plain purchase. Keep that door open yourself.

kestrel is right for the simple case and wrong the moment the file gets strange. We refer clients out to two brokers and the pattern over about thirty referrals is consistent. Salaried W2 buyer, one property, good credit, they don't need us or the broker, the bank handles it. Investor with four financed properties, income coming from an LLC, a property that needs work before it'll appraise, that file dies at three banks in a row and nobody at the branch can tell you why. That's where the broker earns the fee, because they know the four shops that write that exact file and they know the order to send it in. meridian, which of those two are you.

First rental with a job and clean credit is the easy version. Wait until you buy something that needs a roof before it appraises.

Something nobody's said yet about the referral side. A broker who wants repeat business from an agent or a contractor has a reason to care about your closing date in a way an 800 number does not. I've had a broker call an underwriter on a Saturday because the file was going to blow a contract deadline. I've never had an online portal do that. It's not worth a point on its own, though it's worth something, and it's part of why the fee isn't purely a tax.

fathom, on the comp question, is there a normal range for what lender-paid comp actually is as a percentage. I keep getting told it varies and I understand it varies, but I'd like to know whether I should expect something around 1 percent or something around 3, so I can tell when a quote is out of line. Also curious whether it's typically capped per lender agreement or negotiated per file.

Owners get into trouble on the rental-income question specifically, and I see it happen over and over. Whether a lender uses market rent from the appraisal, your actual signed lease, or a haircut on either changes the qualifying number by hundreds of dollars a month. A good broker asks you for the lease before they pick a lender. A bank loan officer taking your application at a branch usually asks for it after, and by then you're committed to their box. meridian, if you're buying a place with a tenant already in it, ask all four how they'll treat that lease and see who has an actual answer.

I'd add the lock question to your list. Ask each of the four how long the rate lock runs, what an extension costs, and who eats it if underwriting drags. My first purchase went eleven days past the original lock and the extension fee wasn't something I'd asked about in advance, which was on me. A broker manages that across lenders and knows whose lock desk is reasonable, though you can absolutely ask the question yourself. Writing it down beats trusting your memory of a phone call.

I got confused by the same thing a few weeks ago and what finally made it click for me was that broker and lender are just different jobs. The broker is the one who packages and shops. The lender is the one whose money shows up at closing. So asking whether to use a broker isn't asking whether to skip shopping around, it's asking whether you want to do the shopping yourself or pay someone who already knows the shelf. On a first purchase with four willing lenders I'd probably do it myself and take notes for next time.

cobalt's split is the useful one and I'd like to push on it. If the plain-file borrower doesn't need a broker, but the odd-file borrower does, how does a borrower find out which one they are before they've burned three credit pulls and six weeks. Is there a set of questions you can ask yourself up front. My guess is it comes down to whether every dollar of your income shows up on a W2 and whether the property will appraise as-is, but I'd rather hear it from someone who's placed files. meridian, whatever the poll says, I'd love to know which way you go and what the fee ends up being.