Who Should Use a Mortgage Broker? Everyone!
What is a mortgage broker?
There are still a lot of misconceptions and misunderstandings out there when it comes to mortgage brokers and what they do.
A mortgage broker is a professional who is licensed with the Real Estate Council of Alberta (RECA). In order to obtain this credential, a mortgage broker is required to meet educational and professional conduct requirements, and complete background security checks.
How is a mortgage broker different from a bank?
A mortgage broker should never be compared to your local financial institution. The purpose and function of each is very different. An independent mortgage broker is just that-independent-meaning they have no association with any one lender. That means it’s their job to offer you unbiased advice.
Essentially, they’re experts who are trained and licensed in the business of mortgage financing. Their primary function is to work for you-not the lender! They shop the mortgage market for the best rate, term, and product for the consumer, but they also offer more than this-providing debt consolidation solutions and credit recovery strategies.
Best of all, a mortgage through a broker operates in the same way as the one you would get through your local financing institution. Online banking, accelerated payments, and pre-payment options are all available. It’s easy and hassle-free.
MYTH#1: Interest rates through a mortgage broker are high.
TRUTH: The industry’s lowest interest rates are only available through a mortgage broker.
Why should I use an independent mortgage broker?
It pays to work with a broker who will represent your interests and ensure the mortgage you get is the one that’s best suited to your needs. Mortgage brokers have direct access to every major lender across Canada. Whether it’s a chartered bank, trust or insurance company, or private lender, each offers different rates and product features. Most important for you to know is that many of these lenders are only accessible through a mortgage broker. You will want to ensure you get the one that’s right for you.
Once you have decided where to apply, obtaining mortgage approval is often dependent on the way your application is presented and who it gets sent to. A mortgage broker is trained to present your application so it will get an immediate, positive result. The turnaround time for a broker to get a response from a lender and secure you financing can be within just 1-3 days, depending on the workload of the lender.
Who pays the mortgage broker?
Mortgage brokers get paid a “finder’s fee” for residential mortgages from the lender once the deal has been completed and funded. Therefore, most brokers do not charge clients for their services. To ensure there are no misunderstandings, make sure you ask your mortgage broker upfront if the lender will be paying their fee.
MYTH #2: A mortgage broker only deals with people who have bruised credit
TRUTH: Whether you have good credit or poor credit, a broker can be a valuable asset.
Independent statistics tell the story… the use of mortgages brokers continues to grow in leaps and bounds each year as people get a better understanding of what they do.
If you’re considering using a broker, ask your neighbors or friends who they know or have dealt with in the past. Get to know the broker you’ve selected. Are they affiliated with a lender? How do they go about finding a mortgage? If you’re a busy person, ask if they will come to your office or home to talk about a lender’s offer. Most importantly, ask to review your credit bureau with the broker.
Remember, going through a big bank that offers you only one “posted” rate could cost you thousands of dollars. Why shell out extra money when you don’t have to?