Brokers Facilitate Mortgage Transactions
The main aspect of a mortgage brokers job is to facilitate the mortgage transaction between the borrower and lender. This is very much like a middle man but the end cost will usually be lower than if you went to a lender on your own. We have all heard (and I have witnessed first hand) the stories of the interest rates offered to clients with great credit and income on a mortgage renewal, then working with a mortgage broker who got another 1 to 1.5 percent off the interest rate from the same lender. Or, the first time buyer who went to a bank only to get turned down then going to a broker and being approved for a mortgage at the best rate available from another lender. How is it a mortgage broker can get better interest rates than a long time customer of a bank or get an approval for a client that was turned down.
When you go to a lender like a national bank, regional credit union or finance company you will most likely be talking with an employee of that lender. The employee only has a duty of care to you and buyer beware still plays a part in the transaction. Like any other business, lenders are in business to make money, not give it away. If they can see a way to make a profit while still being competitive, they will and that employee has a duty to work for the best interests of their employer, who is, your possible lender. On the other hand, a licensed mortgage broker in British Columbia has a fiduciary duty to their clients. Fiduciary duty is the highest standard of care at either equity or law. The mortgage broker must not put his personal interests before the clients or profit from that position unless the client consents, that is why there are disclosures that must be signed prior to the mortgage being funded; so you know what is happening at all times. Yes a mortgage broker gets paid, and most times they receive a fee from the lender for assisting in the process. So the broker has a fiduciary duty to the client and a duty of care and disclosure to the lender. A win/win situation for all concerned. In a nutshell working with a mortgage broker helps you get the best deal in a timely manner, they are not just selling you a mortgage product.
Before your application is sent to your chosen lenders for approval a mortgage broker will go over your financial situation and point our any problems that may occur. This will give you time to correct that area or the ability to choose a lender that may be more flexible with your situation.
Mortgage brokers use many different lenders to secure mortgages for their clients. The benefit of multiple sources of funding is better rates and a greater ability to get a mortgage product that fits your needs. Because of the access to different lenders, mortgage brokers know what lenders are offering rate specials, who has the best variable or fixed rate and what the service levels are like. When you go to your own lender are you positive you're getting the best rate because most times lenders will not advertise their best rates, only their posted ones and the difference could be up to 2.2 percent.
Just like rates there are many different mortgage products available but generally each lender has one guideline to follow, so if your situation does not fit into how that lender views risk (you or the property) you will be declined. Knowing the guidelines of many different lenders will give you an edge to get the best product for you and an approval. Examples like: do you need to use support payments or tax credits as income, is your income hard to document or do you have issues with your credit rating; is the property rural or a small condo in the city, does it have a non-conforming suite that your using the rent as income? Different lenders do different things and knowing who does what will benefit you.
Mortgage brokers are
professionals that understand how banks, credit unions, trust company's
work with the focus being on mortgages and nothing
else. The information a Canadian mortgage broker offers is
normally up to date and tailored to your situation and if you are
working with an Accredited Mortgage Professional (AMP); you know you
are being taken care of with the highest principles, ethics and
commitment to ongoing education.
On a personal note,
I am and continue to be an Accredited Mortgage Professional because of
the excitement of the industry. The ability to work with many
people from multiple walks of life, and situations, good along with the
not so good. To be able to help a person achieve the dream of
homeownership, to teach the techniques to save money and pay off debt
and to connect with trusted clients. A mortgage broker is
about knowledge and service, a great mortgage broker is about
knowledge, service and enjoying the profession.
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