There are several reasons why you might consider using a mortgage broker. Most potential homeowners and buyers default to going to their bank for a mortgage solution because that’s what we’re wired to do (hence the default setting). But if you step back and understand that this works to serve the bank more than it, would you and your needs, you’ll realize the value of using a mortgage broker very quickly.
Firstly, when you go to your bank for a mortgage, chances are that they won’t have the best product for you and since they can only offer you what they have to offer, then you are limited to their internal product offerings. In other words, if 30+ mortgage lenders could serve you, the chances that your bank happens to have the “best” product is like 1/30.
Secondly, sometimes your application may not be approved by your bank, not because you can’t get a mortgage, but rather because your application does not fit their specific guidelines (and/or risk tolerance).
Although times are changing now, it used to be in this moment (a bank rejecting you) do people realize that a mortgage broker can help. Mortgage brokers are professionals who have multiple partnerships with various mortgage lenders but do not exclusively work for any given institution or bank. We are simply outsiders with visibility into their internal guidelines and products to bring the right lender to the right client. By being equipped with this additional knowledge of product offerings across a broader lending market, we can seek out better solutions to ensure you are getting the best possible mortgage given your current application and financial circumstances.
Working with a mortgage broker can also save you a lot of time. Can you imagine going to your bank and then across the street to another bank and again to another? After 2-3 attempts you might find it exhaustive and see that you’re not getting much in terms of value. By working with a mortgage broker, we take your application and send them out with more precision and often to lenders that you would not typically have access to (monoline lenders, Trust companies, etc.). These lenders have historically been shown to offer better rates and products than the common banks out of necessity to compete with those banks.
We also can’t forget that a mortgage broker can negotiate on your behalf better than you might be able to do for yourself. This comes back to knowing the rates and products that are being offered across the market. So, when we highlight your strength and showcase your application as attractive to multiple lenders, they’ll likely want to “sweeten” their offer so that your mortgage application “sticks” with them.
Finally, in most cases working with a mortgage broker is at no cost to you. This is because the lender pays a “finder’s fee” for bringing a mutually suitable client to them. This finder’s fee is typically paid on most mortgages that are closed with the lender. However, it is worth noting that there can be instances of brokerage fees resulting in deals that are more difficult to place or carry inherent risks to the lender and brokerage. In these cases, the lender is unwilling to pay the full finder’s fee because of the risks involved in the mortgage transaction. Either way, any costs associated with working with a mortgage broker should be disclosed to clients as early as possible (during the review phase of the application) so that there are no surprises for the clients.
We’ve been operating as an established mortgage brokerage for 30+ years and have been helping with all sorts of mortgage scenarios that come with our clients at any point in their lives. Instead of defaulting to your bank (which they count on), give us a ring at 905-455-5005