What to Look for in a Mortgage Broker
Unless you are part of the top one per cent who can buy a house without financing, you will need to secure a mortgage to buy property. In 2019, securing a mortgage requires upfront financial commitments and proof that you are capable of carrying this much debt without fear of defaulting on the loan. This is getting harder and harder for people.
Everyone’s situation is different. Some people have single incomes, some are self-employed, and some are new Canadians without much of an established credit rating here. To be approved for a decent mortgage suited to your needs, enlist the help of a mortgage broker.
So, what should you look for in a mortgage broker?
What does a mortgage broker do?
Before you work with a mortgage broker, you should better understand what one does. Unlike the bank, which has access to only its own mortgage products, mortgage brokers work as liaisons between buyers and lenders.
With changing rules and rising prices, many would-be homebuyers are getting denied by traditional lenders, such as the major banks. This is where a mortgage broker can be useful.
Mortgage brokers can obtain mortgages on behalf of clients through traditional lenders, as well as alternative and private lenders. This means more options, personalized service and a clearer path towards home ownership.
While using a mortgage broker seems like the best option, you still need to be mindful of whom you work with. Because alternative and private lenders aren’t regulated, borrowing from them can be a risk. For those who are already in unstable financial situations, it’s imperative that you work with a qualified, trustworthy mortgage broker who will look out for you – steering you away from risky lenders if they know you cannot carry that debt with high interest rates.
Make sure that the mortgage broker you choose to work with is working for you – not the lenders. They should be negotiating on your behalf to secure the best mortgage for your situation.
Years of experience
Always ask, or look up, how many years a mortgage broker has been licensed and working in the business. If they’ve had a long career without any issues, you can trust that they will have the knowledge and skills to get you the mortgage that works for you.
When they speak, do they sound confident and knowledgeable on the subject? Are they being honest and straightforward? Or are they just telling you what you want to hear? When it comes to taking on huge debt like this, you want your broker to offer expert advice to ensure you’re getting a good deal that works.
Rates and offerings
A good mortgage broker will shop around for the best or most competitive rates on your behalf. They will also negotiate the terms of your mortgage – which is an important part of the service.
When dealing with a loan officer at a bank, you have to be your own advocate. With a broker acting in your interest, you can get a mortgage with terms that work for you. They know how to talk the talk and walk the walk when it comes to dealing with lenders.
They will deal with the back and forth and the shopping around – that is their job.
The general vibe
Looking at experience, credentials and offerings is important when choosing a mortgage broker, but you also have to work well together. How easy are they to work with? Do they respond to you within a reasonable amount of time? Are they available for face-to-face meetings or do they work mostly online – or a bit of both?
How did you find out about them? Were they referred to you by someone you trust who used their services? Or are they a friend of a friend, or so-and-so’s cousin? When it comes to referrals, trust those who are actual clients of the broker, as they will know firsthand what it’s like to work with them.
Questions you should ask
Be sure to ask how they are compensated. Most mortgage brokers are paid by the lenders and banks based on the mortgage, with no upfront cost to the client. The reason you should ask is that you want to be sure that the amount the broker receives as compensation for their work will not affect how they choose a mortgage for you. It should be transparent.
Ask questions about how the application process works. Make sure that the broker has a good working relationship with at least five qualified lenders.
While mortgage brokers shop for good rates for you, you need to shop for good brokers first!