The primary service that a broker can offer is competition and competition means a better rate for you. Picture this scenario: you walk into your own bank looking for a mortgage. The loans officer offers you their posted rate. You know this rate is higher than you have seen it in other advertising so you begin negotiating the rate down but have a hard time making any headway.
Now picture the following scenario: you walk into a broker’s office after you visit the bank expecting to get quoted rates not unlike the bank but to your surprise they are significantly discounted and there is no haggling. So why is there such a vast difference between the two?
The difference is simple. In one scenario you have a loans officer with a goal to get you to pay as much as he/she can to net his company the most profit because he is their employee and they pay his salary and often commission. In the other scenario, the mortgage broker is not an employee working for the bank and therefore has no loyalty to any financial institution and only has the obligation to ensure his client gets the best deal possible.
When dealing with a mortgage broker you can ensure you are getting the best rate because they have the ability to send it to a number of different major banks, trust companies and alternative lenders and have them compete for your business. A mortgage broker can send your application into 5 major banks and find out who is willing to provide the best rate with little to no preference as to who it is. That’s the advantage of having competition rather than dealing with one lender.
People are often concerned with the fact that there is always a cost associated with dealing with a mortgage broker and this is certainly not the case. Mortgage brokers are typically paid by the banks to place your mortgage with them. A mortgage broker seeks out not only the best rates but the most flexible terms and places your mortgage with that lending institution. In exchange for granting them business that they may have never seen the bank pays the mortgage brokerage a finder’s fee. For the consumer this means you get the most competitive pricing with the most flexibility at no cost to you!
There are a lot of distinct advantages to using a mortgage broker that you would not get from your bank. Having access to a variety of products is another benefit that you can get from using a broker. Most major financial institutions offer a number of different products that vary from what other banks offer. Using a mortgage broker allows you access to all of the various mortgages offered by the banks.
You also have the added benefit of having only one credit report pulled. For you to seriously negotiate your mortgage rate with any financial company they have to look at your credit to determine the risk involved in lending to you. If your bank declines you or you don’t like the rate they are offering you, there is no other option but to move on to the next bank and have them look at your credit. Having your credit reviewed over and over can lower your score and is time consuming and frustrating. A broker is only required to pull one credit report and it can be sent to all of the major institutions. Again this ensures you get the best rate and your credit stays in tact.
A mortgage broker can also save you time and energy. In the event that your income circumstances, credit or debt servicing ratios do not meet a particular lender’s criteria a mortgage broker can avoid an ineffective submission. Making an application for something you can’t be approved for is not only a waste of time but it can diminish your chances of applying for a mortgage you could have been approved for.
In the event that you do have circumstances that might inhibit you from being approved from a conventional lender a broker can offer a variety of solutions to find you the financing you need. A good mortgage broker will have access to over 50 different lenders: institutional, sub-prime and private. This will ensure that you get the best rate, have the most flexibility and that you get the financing you need.
A mortgage broker can offer a lot more than your bank can so the next time you decide to purchase, your mortgage is up for a renewal or you decide to refinance your property call a mortgage broker!