All About Mortgage Brokers

Mortgage brokers not only help you apply for the best mortgage to purchase a house, but they also help in refinancing debt, buying a second home, obtaining a lower interest on your mortgage. Some even help in consolidating debt.

But are they necessary? The answer is a clear YES, especially if this is your first time applying for a mortgage and you know nothing about the mortgage market. That’s the first reason.

The second reason is that you don’t pay a cent for their services, and they’d only be too glad to help. That’s because they earn their fees from the banks and other financial institutions they represent.

Third, they don’t have a conflict of interest. Some mortgage brokers represent as many as 30-40 banks, credit unions and lending entities and their main job is to help you find the best deal out there that fits your needs.

Fourth, they have a vast network of knowledge, expertise and products. They receive regular updates from banks and credit unions, and know when rates go up or down. If there is something you need to know specifically about mortgages, they will provide the answers so you can make an intelligent decision. If they don’t have the answers, they’ll go and get them for you. They’ll even explain mortgage-related issues like credit report, credit score, zero down payment, cash back offers, prepayment options, etc.

Fifth, it can be very convenient. Usually when you need to sort out a money issue or need a loan, you have to step out of your house and make your way to the bank. Traffic and parking are two things you have to contend with. Mortgage brokers will go out of their way to meet you wherever you want – your home, your office, in a cafe, or in the library.

So, by all means, go ahead and use a mortgage broker before you approach your banker for a loan. Since it won’t cost you a cent, you might as well take advantage of this service.

Note too that a broker will work to find you the best loan that matches your criteria. They work for you, they don’t work for the institution that is selling the mortgage product. Since they are not employed by any of the financial institutions they represent, you have the assurance that they’re not selling you a product you don’t need.

Tips for Finding the Right Mortgage Broker

Make sure your broker is licensed to practice. Each province has a licensing authority that regulates the mortgage brokering business. If you live in Ontario, mortgage brokers are licensed by the Financial Services Commission of Ontario (FSCO), an agency of the Ministry of Finance. Regardless of province, brokers should be members of the Canadian Institute of Mortgage Brokers and Lenders (www.cimbl.ca).

Also, a good broker shows respect by not rushing or forcing you into a deal that you’re not clear about. A good broker will take the time and make the effort to answer all your questions, and in fact should encourage you to ask as many questions as you can. These questions could include:

• How frequently is the rate adjusted?
• What is the maximum annual adjustment?
• What are the caps?
• What index is the rate based on?
• What is the margin
• What are the discount points and origination fees?
• …and many more that are relevant to your needs and situation

He or she is also knowledgeable, professional, credible, and gives you straight answers without using jargon.

One final point: working with a mortgage broker is a better strategy than going to three or four different banks, because each bank will will request your credit report. When there are too many requests in a short period of time, that raises a red flag with the credit bureaus. However, if you work with a mortgage broker, all he or she needs is one credit report, which is then presented to the lending institutions who compete for your business.

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ABOUT THE AUTHOR:

Zack Ashan -- a.k.a. "The Mortgage Guru" -- is a licensed Mortgage Broker based in the Greater Toronto Area. Zack's personal mission is to help as many people as possible WIN the mortgage game, by providing them with clear, honest and valuable advice. Learn more about Zack and pick up his groundbreaking book "The Insider's Guide to WINNING the Mortgage Game" at http://www.mortgage-guru.ca.