What is a mortgage broker, and should I use one?
23 July, 2018 / by
Whether you are consolidating debt, refinancing your home, buying a new one, or looking to conduct home renovations, there are a number of options at your disposal. You can go talk to your bank, or do like a growing number of Canadians are doing, and speak with a mortgage broker.
But what is a mortgage broker exactly, and what can they do for you?
A mortgage broker is a licensed professional – a person who serves as a bridge between a homeowner and a lender.
As a middleman, a mortgage broker evaluates the financial capacity of a borrower. A broker looks for top quality lending products and handles all transactions for their clients. A broker gathers the necessary documents to apply for a mortgage and then facilitates the underwriting and approval process. They ensure that the transactions are valid and complete.
The Lending Process
When should I see a mortgage broker?
Now that you know what a mortgage broker is, you also need to determine when the right time is to consult with one. If you fall in any one of the categories below, you might need to see a broker:
- You are a first-time home buyer.
- You want to purchase a second property
- You want to free up funds for things like renovations, a child’s education, investments, and more.
- You have very limited time left to purchase a house.
- You are not comfortable with the idea of negotiating with lenders.
- You have a weak credit score.
- You want access to exclusive rates and deals from banks which are offered only to brokers.
- You prefer to have an expert who provides you with an educated and confident analysis of the current housing market.
- You need help in deciding on a financing structure that is advantageous for you in the long run.
Take the case of Maureen:
Maureen is an interior design artist who moved to Toronto with her husband. After doing her research, she signed an agreement to buy a house. A bank approved her mortgage, and she was ready to make the deposit of her first mortgage. However, knowing that the bank was willing to lend her thousands of dollars, she was skeptical if she was getting the best offer.
While considering the offer, a friend suggested that she consult with a mortgage broker. Her friend recommended a broker whom she transacted with before. After talking to the broker, Maureen realized that the rates presented by the broker are better compared to the bank’s offer.
Though Maureen was initially unaware about the important role that a mortgage broker plays in home buying, she made the decision to close the deal for her new home through one whens she realized the undeniable advantages.
Mortgage brokers are very convenient to work with. They have extensive networks of investors, lenders, and real estate companies. Just like in the abovementioned case of Maureen, mortgage brokers are committed in providing you housing options that match your requirements.
The benefits of working with a professional mortgage broker
Licensed mortgage brokers are professionals who are well-trained and knowledgeable at what they do. Most of them have a proven track record when it comes to handling mortgage transactions. Moreover, given their extensive experience in the housing industry, their network is just as vast.
Access to critical industry information
Working with a mortgage broker means gaining access to first-hand information on your market and lending options. Brokers are part of a broad community where members share valuable data. These details include real property values, new home releases, new financing rules, pricing, and among others.
Access to the best lending rates
Because most mortgage brokers have access to an extensive network of lenders, borrowers who tap their expertise widen their options.
Customize your loan plan
Brokers have access to traditional and non-traditional lenders which may be able to offer creative financing solutions for your situation.
Mortgage brokers are there to work for you. They will handle many of behind-the-scenes paperwork and negotiation that will help ensure you get the achieve the most favorable loan solution.
Factors to consider when choosing a mortgage broker
Not all mortgage brokers are the same. Some may be more equipped to meet your needs than others. Therefore, you need to consider the following:
License and affiliation of a mortgage broker
Be sure to consult only with a licensed broker who is officially registered as a member of Canada’s National Association of Professional Mortgage Brokers. These associations spread advocacy, share knowledge, and disseminate relevant information to mortgage clients.
Canadian resident and knowledge of the locality
Your chosen licensed mortgage broker should be a resident of Canada, and must be familiar with the housing market of the specific location where you intend to purchase a new home.
Mortgage lender portfolio
A comprehensive mortgage lender portfolio is proof of all the hard work the mortgage broker has put in. Moreover, access to as many lenders as possible means a broker has the means to help you find the right funding.
Word-of-mouth is a handy marketing tool because it means people have already transacted with a particular mortgage broker and they are overall pleased with his performance. Seek recommendations from family and friends, and check the broker’s online star ratings and reviews.
Integrity and open communication
All forms of investment involve money, effort, and time. A professional mortgage broker must be reliable and trustworthy to handle your investments. Likewise, these middlemen must maintain constant communication with lenders and borrowers alike.
It’s easy to get intimidated when big numbers come into the picture. But with Canadian Mortgages, Inc., whether it’s customizing a loan or looking for alternative lending options, interest rates, home equity opportunities, or debt consolidation plans, the help that you need is readily available with a professional mortgage broker.