A mortgage insurance broker is an insurance professional who assists clients with obtaining mortgage insurance appropriate to their needs and any requirements set by a lender. Rather than representing a specific insurance company, the broker has access to policy information on a number of different types of plans and can help clients negotiate the best deal. The law usually requires insurance brokers to hold a license and to display their license numbers for the benefit of clients on communications like advertisements and business cards.
Mortgage insurance protects lenders from default. Lenders often require it when borrowers make a low down payment, and borrowers can also choose to carry it on their own if they have special concerns about defaulting. The price of mortgage insurance typically varies depending on the size of the mortgage and the level of risk. Public insurance is available to some borrowers and in other cases it is necessary to purchase private mortgage insurance (PMI).
The work of a mortgage insurance broker starts when a client requests assistance. Real estate agents often refer their clients to the broker as part of the services they offer, with the goal of closing the deal and successfully completing the property transaction. Real estate purchasers can also research mortgage insurance brokers on their own. The broker will meet with the client to discuss the situation, including the nature of the mortgage and any concerns the client may have.
After collecting some information about the client, the mortgage insurance broker can determine what kinds of insurance the client is eligible for and will present the client with a list of options. A mortgage insurance broker can discuss pros and cons of different policies, pointing out issues like premium costs, the amount of coverage provided, and any special riders on the policy. She may offer recommendations on request but will not push clients into purchasing a particular plan, and can also offer advice about packaged products that may be cheaper, such as a combination mortgage insurance and life insurance plan.
Once clients select a plan, the mortgage insurance broker initiates the paperwork to start the policy and submits documentation to the real estate agent and the lender. This alerts them to the fact that the borrower is ready to carry mortgage insurance on the loan. With this paperwork and other proof of meeting the terms of the loan, the lender can generate the loan and close the deal, transferring funds to the seller.