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Mortgage Broker

Real-Life Activities

Real-Life Decision Making

Mortgage brokers do not make any decisions about loans. "We don't approve or disapprove of a loan," says Don Taylor, a commercial mortgage broker. "That's up to the lender. However, we do provide the lender with a recommendation."

Mortgage brokers bring borrowers and lenders together. And they take an active role in helping them make decisions. So they have to serve the best interests of both sides, and any decisions mortgage brokers make will directly impact the financial future of everybody involved.

"You certainly stand to lose income if you make poor decisions," says Leanne Wilson, a mortgage broker who works in commercial and residential real estate. "You would lose clients. Unhappy customers would not recommend you. Or you would lose your lenders."

You are a commercial mortgage broker. A group of entrepreneurs approach you. They want to buy a business, and they want to finance part of it through a private mortgage. But they are not sure how they want to make their mortgage payments.

They have two options. They can pay $1,500 each month for the next six months. Or they could pay $9,000 up front for the first six months plus a small interest fee. This is called a pre-payment penalty. But this also means that they would not make any mortgage payments for the first six months. So they ask you for your advice.

What do you do?