Why Everyone Should Use a Mortgage Broker
Hiring a mortgage broker is one of the simplest parts of the home buying process, and yet, according to a survey by the Mortgage Professionals Association of Canada, 39% of first-time home buyers have a poor understanding of what brokers do and their role in the mortgage process. Once brokers’ services are explained, the likelihood of respondents to use one jump from 36% to 59% (and even higher as understanding increases). If you don’t know about the role that mortgage brokers play in the process of getting a mortgage, you could be leaving thousands of dollars on the table. Here are seven reasons why you should use a mortgage broker – even if you’ve never heard of them before.
- Lower rates
The most obvious reason that people choose to obtain a mortgage through a mortgage broker is that brokers have access to multiple rates and lenders. Because of this, mortgage brokers have access to rates that may not always be advertised widely, and can be significantly lower than those advertised by banks or credit unions.
Many lenders’ rates and mortgages can only be accessed through a mortgage broker. Brokers can also vet lenders and negotiate on behalf of the buyer, and experienced brokers have relationships with these lenders, as well as the banks. Ignoring these lenders and choosing to get a mortgage with a bank can mean choosing harsher prepayment penalties for breaking your mortgage as well as a higher interest rate, which can cost buyers thousands upon thousands of dollars over the life of their mortgage.
A mortgage broker is able to better tailor a mortgage product to your specific needs, whether that be working with a lender who is more flexible when it comes to self-employed income or one who has more flexible prepayment terms. Because mortgage brokers have access to more lenders, they’re better able to find a lender and a mortgage based on your specific needs and financial situation in order to get you the lowest mortgage rates today.
- Your Ally
A mortgage broker is on your side. “There’s a lot of things that happen when you buy your first home,” said Claire Drage, a mortgage broker with Mortgage Alliance. “A realtor will tell you so much, and the lawyer will tell you so much [but] a good mortgage agent can bring it all together in one place and connect the dots in what can be an overwhelming process.” A mortgage specialist at a bank wants to sell you their product. That’s not a bad thing, but their mortgage product may not be the one that’s most applicable to your situation.
- Free to you
Mortgage brokers operate on commission and are paid by the lenders who ultimately grant you your mortgage. Brokers depend on referrals in order to get business, so it’s in their best interest to serve you as best they can. When interviewing a mortgage broker, ask about their fee structure and how they’re compensated to make sure you’re comfortable with it. There usually isn’t an out-of-pocket cost to you.
Brokers have seen many different clients in varying financial situations. When thinking about how your life may change over the life of your mortgage term, they’ll be able to provide you with options and scenarios that had never crossed your mind and account for them, potentially saving you thousands in the process over the life of your mortgage.
Read the full article by Kimberly Greene here.