Why should you use a Mortgage Broker anyway?

For most of us, our ideas about mortgages have been installed by years of past experience with traditional products in traditional institutions. Long held beliefs sometimes include the idea that mortgage brokers are only for people who have less than perfect credit or have been turned down by a bank. Unfortunately, anyone with this kind of outdated thinking could be loosing thousands of dollars! All home buyers and home owners can save time and money by enlisting the services of a professional mortgage broker.

A mortgage broker has access to many competing lending institutions, including banks, pension funds, trust companies, and even private mortgage lenders. Since mortgage brokers do not have to sell the products of any one lender, they can be completely unbiased in recommending a mortgage that has the most attractive terms and conditions for their clients. While you may arrange a mortgage every five years or so, a mortgage broker and their firm, are completing thousands every year. This enables them to negotiate a better rate based on that volume, which is then passed on to their clients.

There are other potential cost savings. On any given day, a particular lender may have a special rate offer for a specific mortgage term. If you are rate shopping on your own and don’t know who is sponsoring the offer, you can’t take advantage of the special pricing.

At renewal, many homeowners take the renewal quote and choose a term and rate  offered by the lender without realizing that a mortgage broker may be able to save them up to one percentage point off the posted rate. This can translate in thousands of dollars in savings over a five year term. To insure that you get the best rates and terms, it’s best to contact me at least four months prior to your renewal or your new home purchase. Starting early can be a money saver because I have lenders who will hold a rate for you for anywhere up to 90-120 days. Should rates drop prior to closing, or renewal, then you will get the lower rate. 

If your credit rating is important to you, then you also need to consider that when you shop from lender to lender, there is an accumulation of inquiries on your credit bureau report, affecting your credit rating and ultimately the rate and terms of your mortgage. This is not the case with a mortgage broker who only does one inquiry yet can still get many competing lenders to quote your business. 

Finally, an important misconception that should be discussed is fee’s. Some people think that using a broker will be costly, and that there will be upfront fee’s. In most cases there is not fee because the lender that provides the mortgage pays the mortgage broker a fee for originating and negotiating the mortgage. As your would expect, fee’s are required for client’s with impaired credit, for commercial mortgages or when private mortgage money is used. This fee compensates for the additional time and effort that is required to negotiate these mortgages. 

As always please contact me if you have any questions.

Cheers,

Pat