Mortgages & Home Loans Financing Your Home Purchase Using Your Agent's Recommended Mortgage Lender Can your real estate agent help with a mortgage? By Elizabeth Weintraub Elizabeth Weintraub Facebook Twitter Elizabeth Weintraub is a nationally recognized expert in real estate, titles, and escrow. She is a licensed Realtor and broker with more than 40 years of experience in titles and escrow. Her expertise has appeared in the New York Times, Washington Post, CBS Evening News, and HGTV's House Hunters. learn about our editorial policies Updated on March 4, 2021 Reviewed by Lea D. Uradu Reviewed by Lea D. Uradu Lea Uradu, J.D. is graduate of the University of Maryland School of Law, a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, Tax Writer, and Founder of L.A.W. Tax Resolution Services. Lea has worked with hundreds of federal individual and expat tax clients. learn about our financial review board Fact checked by Julian Binder Fact checked by Julian Binder Julian Binder is a fact checker, researcher, and historian. They were the recipient of the North American Studies Book Prize (2016, 2017), and they have previous experience as an economics research assistant. They have also worked as a writer and editor for various companies, and have published cultural studies work in an academic journal. As a fact checker for The Balance, Julian is able to utilize their experience as an editor and economics research assistant. Their role as fact checker is to review articles for accuracy, update data as needed, and verify all facts by citing trusted sources. learn about our editorial policies Share Tweet Pin Email In This Article View All In This Article Which Comes First? Do Real Estate Agents Get Kickbacks? Interest Rates and Fees Those 'Special' Deals Should You Consider a Recommended Lender? Frequently Asked Questions (FAQs) Buyers who use a Realtor recommended mortgage lender may experience fewer problems. Photo: © Big Stock Photo Real estate agents often hand out lists of recommended mortgage lenders. An agent can't survive in the real estate business without a good mortgage lender or two to refer. There's zero financial incentive to an agent in such a recommendation, but it can result in some grateful clients who will remember these small touches that made the whole buying process easier. In fact, buyers often don't know which they should do first—select a mortgage lender or hire a real estate agent. The bottom line is that you should know what to be alert for, whether you're taking your agent's recommendation for a lender or you're launching a search on your own. Which Comes First? You might not know whether you'll even qualify for a mortgage if you hire a real estate agent to start showing you homes without first getting preapproved by a lender. And you won't be able to make a valid offer on a home without a preapproval letter if you come across the perfect place on your first day out touring. That said, there are some advantages to hiring a real estate agent before selecting a mortgage lender. Your real estate agent will be with you from start to finish and involved in all facets of your home-buying experience, but a lender handles only the financing. Do Real Estate Agents Get Kickbacks? It's against RESPA rules for agents to receive kickbacks for referrals to mortgage lenders. A lender can't reward a real estate agent for sending business its way. Section 8 of the RESPA prohibits anyone from receiving compensation or any sort of payment in exchange for a referral on a federal mortgage loan, and almost all conventional loans are sold to government-sponsored entities such as Fannie Mae or Freddie Mac. The remainder are either federal FHA loans or VA, so RESPA applies to just about every mortgage loan. Interest Rates and Fees Popular banking websites dangle sparkly interest rates and APR rates in consumers' faces, but the interest rate and loan fees aren't the most important factors to consider when you're choosing a mortgage lender, even one recommended by your agent. The bottom line is that most lenders actually charge about the same rates. They have access to pretty much the same bags of money. All national institutional lenders compete against other institutional lenders, and their rates are highly competitive. They're also limited in the types of loans and terms they can offer, and they often quote only in-house rates. Note A mortgage broker might have access to larger pools of money from a wider variety of sources. Rates change more than once daily, so that interest rate can vary until your loan rate is locked. A rate promised in the morning could be higher by afternoon. Don't be lured by 1/8 of a percentage point that can swing up or down. You can see how different interest rates can affect your monthly payment and the overall cost of the loan by using our mortgage calculator. Those 'Special' Deals A mortgage lender might also advertise special deals, such as "free" appraisals, but the cost of that appraisal might actually be buried elsewhere. Or a lender might offer you a "free" home security system when the cost is actually absorbed into the monthly fee you're required to pay to for ongoing service. Don't get suckered by slick websites and fast-talking sales pitches. Saving yourself $300 on a $300,000 loan is minuscule and pretty much worthless if the loan doesn't end up funding. Note The most important thing a mortgage lender can do for you is process your loan quickly, efficiently, without errors, and close on time. Should You Consider a Realtor-Recommended Lender? Your real estate agent wants your transaction to close smoothly, without hiccups or surprises, and one of the biggest factors involved with buying a home is the financing end of the arrangement. Many things can go wrong, from a mortgage lender being careless when scrutinizing the loan application to misplacing documents or not asking for the right documents. It might overlook potential trouble spots and red flags, or neglect to order an appraisal so the file can't be closed on time. Real estate agents who routinely close a lot of business have experience working with a variety of lenders, and they know which of them will deliver. You can rely on your agent's intimate knowledge by choosing the mortgage lender your agent recommends. Note These lenders also realize that the agent will stop referring business if they don't perform to the agent's expectations. Most homebuyers want their new home purchase to be handled thoughtfully. They want to close within the contract period. That scenario is more likely to happen if you use your agent's mortgage lender. A Final Word of Warning Many mortgage loans are sold after closing. Don't assume that your loan will remain at that bank if you choose a bank out of loyalty because you maintain accounts there. Frequently Asked Questions (FAQs) What is a hard money lender in real estate? A hard money loan is one that's backed by real property and issued by a private lender. A home is an example of real property, so if a private lender offers you a mortgage, then that is an example of a hard money lender. Do I need a realtor to refinance my home? You do not need a realtor to refinance your home. Refinancing is a process that occurs between you and a lender. You will likely need to work with an appraiser, but you won't need to work with a realtor. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Consumer Financial Protection Bureau. "§ 1024.14 Prohibition Against Kickbacks and Unearned Fees." Congressional Budget Office. "Fannie Mae, Freddie Mac, and the Federal Role in the Secondary Mortgage Market," Page 5.