A mortgage broker is a licensed professional who gives advice and negotiates the best mortgages for the benefit of people or organizations. Customarily, banks and other lending establishments e.g. credit unions deal with the public directly. As mortgages become more complicated and specialized, the need to have a mortgage broker becomes more important.
Mortgage brokers act as a liaison for bank, credit union or lender that will make the loan an individual is looking for. Mortgage brokers in Canada are paid by the lender and don’t charge fees for good credit applications. They are also regulated by the government depending upon the province the Mortgage Broker is licensed under. The degree of the regulation relies upon the jurisdiction.
The Difference Between A Mortgage Broker And A Loan Officer
A mortgage broker acts as the middle man between the purchaser (borrower) and the moneylender (banks and non-bank moneylenders), while a loan officer commonly works directly for the bank or lender. Numerous provinces require the mortgage broker to be licensed. The best way to describe this is a mortgage broker works with multiple banks/lenders to give the best options or strategy to the borrower while a loan officer can only offer what his employer has available.
Here is a short list of what a mortgage broker can do:
- Understand the goals, higher purpose and ambitions of the clients.
- Anticipate the fears, considerations and challenges the may get in the way.
- Gathering required documentation (paystubs/payslips, credit checks, bank statements etc).
- Evaluation of the borrower’s conditions based on income, credit and down payment.
- Evaluating the various mortgage products and solutions available in the market to discover a mortgage option that meets the customer’s requirements.
- Applying for a lenders’ commitment on a basic level.
- Clarifying all legal requirements and privileges available.
- Offering best guidance for the customers’ conditions throughout the loan process.
- Maintain ongoing education and relationship with the client from the initial consultation until the mortgage is fully paid.
Benefits Of Working With A Mortgage Broker
Mortgage Brokers are specialists when it comes to mortgages, unlike Bank representatives, they don’t deal with RRSPs, Mutual funds, bank accounts, consumer loans and credit cards. It’s like dealing with a heart surgeon who specializes with all matters of the heart vs dealing with a General Practitioner for ordinary day to day health considerations.
Here are some of the many benefits when working with a Mortgage Broker:
1. You Can Be Candid
Mortgage brokers are there to hear your desires, fears and concerns without fear of saying or sharing too much information. The Mortgage Broker will only pick the most important information to share with the lender. Their job is to present you in the best light with the Lender so they can get the best mortgage terms for you.
2. Work With One Point Of Contact
Banks move their people around when they get promoted or due to restructuring etc. Most of the time, you will be dealing with different people every time you call them or arrange an appointment. You then have to explain yourself again every time you talk to somebody. When you are dealing with a Mortgage Broker you will be dealing with the same person throughout the transaction and most of the time throughout the life of your mortgage. You then will feel this comfort and peace of mind that you are heard and understood.
3) You save time, energy, and stress less
Do you have time to meet with the different banks and credit unions in your community? A Mortgage Broker does. She will deal with all the banks for you so you don’t have to. There are times when Bank A has a mortgage special that Bank B does, and then the following week, Bank C would have something. A Mortgage Broker has access to what’s available and what’s special everyday. They have all the information and relevant data that will help you make an informed decision.
How To Choose The Best Mortgage Broker
Now that you know how important it is to work with a Mortgage Broker, what’s next? How do you find the best ones? Just like in any industry where there are good cops and bad cops, good doctors and bad doctors, there are good mortgage brokers and not so good mortgage brokers. Here’s what you should be asking when looking for the best mortgage broker to deal with:
1. Find out how long have they been a mortgage broker?
According Malcom Gladwell’s book Outliers: The Story of Success, you have to have 10,000 in a subject to be an expert. Some Mortgage Brokers are not doing this full time, therein lies an issue. Are you really dealing with an Expert if they are not working full-time? In order to accumulate 10,000 hours the person you are dealing with has to be working full time as a Mortgage Broker for at least 7 years. The longer they have been working in the industry, the higher the chances that you are working with a true expert.
2. Can they introduce you to past clients who they have been working with for over 7 years?
Some Mortgage Brokers are only good during the initial transaction. After the mortgage closes, you don’t hear from them again. Some clients don’t want to go with the same mortgage broker after the first transaction due to some unhappy experiences. If the Mortgage Broker can refer you past clients whom she’s helped for over 7 years, chances are she helped them with more than one mortgage.
3. How do they maintain ongoing education and relationships with their clients?
A mortgage has an amortization of 25 or 30 years, therefore your relationship with your Mortgage Broker can be that long too. What is she doing to stay connected with you and to keep you informed and inspired about wealth building and financial legacy? You want to be working with a Mortgage Broker who can elevate your success financially over time through ongoing education and long term relationship.
55% of First Time Homebuyers use the services of a Mortgage Broker when buying a home. Over time, more and more people are using their services because they see the value of working with a Specialized Professional.
What is the best use of your time? Time with your family, time with your career. When it comes to managing your mortgage leave that with the professionals while you live your best life.