Mortgage Brokers Demystified

Unclear as to what a mortgage broker can do for you? This article discusses some of the many benefits and services provided by mortgage brokers in Canada. After reading this article, we hope you will understand why you will benefit by using a mortgage broker for mortgage financing. 

What is a mortgage broker?
Simply stated, a mortgage broker is an agent for lenders in much the same way an insurance broker is an agent for insurance companies. Mortgage brokers act as agents for banks, trust companies, credit unions, mortgage corporations, mortgage investment corporations, finance companies and individual private investors. Some mortgage brokers are exclusively lenders of their own money and provide a direct source of mortgage funds (a topic to be discussed in a later issue). Mortgage brokers are trained professionals that have to meet a satisfactory educational requirement before they may become registered. As such, this requirement ensures you are being provided with a duty of care, a working knowledge of mortgage products and a standard of service to meet individual needs.

So, how would I benefit by using a mortgage broker?
Using the services of a mortgage broker for the first time usually results in the following testimonials:

• I originally thought you only used mortgage brokers if you couldn't qualify at the bank….I was wrong.
• I didn't feel intimidated or left in the dark for days on end wondering if I would qualify;
• My mortgage was approved the very same day I applied;
• I didn't realize there were so many terms and conditions that vary among the different institutions. My mortgage broker took the time to explain them to me;
• I didn't realize many mortgage products and discounts were available exclusively through mortgage brokers;
• I always thought you had to pay fees but because my mortgage was approved based on my credit history and income, there were no lender or brokerage fees charged;
• I didn't have to leave my home or take time off work to apply;
• The broker clearly explained the interest rates, prepayment privileges and other important terms and conditions which helped clarify some of my many questions and helped save me a great deal of money as a result;
• Within five minutes, the broker explained how much of a mortgage I qualified for;
• Within five minutes the broker told me that I had enough income to qualify for my $160,000 condominium purchase;
• The application process was pleasant and over the telephone;
• I didn't have to take the time to shop financial institutions for the best mortgage myself, the broker did everything and got me what I wanted;
• The broker was always accessible on evenings or weekends when I needed an important question answered before making an offer on a property;

What will the mortgage broker need to know? As you probably already know, lender terms and conditions are not created equal. So, whether you are purchasing a property or refinancing an existing mortgage, there are many factors to take into consideration. A quick analysis of your personal situation by a qualified mortgage broker, lets him/her know where to shop the market. Some things he/she will need to know are:

• Net worth (i.e. your assets less your liabilities);
• Income (i.e. income from employment or self-employment);
• Credit history (i.e. your payment history with your other creditors, loans credit cards etc.);
• Property type (i.e. Residential, Land only, recreational, remote location etc.);
• Down payment amount;

Once your application is complete, the mortgage broker knows where you will qualify. With the click of a few buttons, he/she can tap into the vast network of computers which connect lenders and brokers electronically. As mentioned above, the broker can obtain rate discounts for you that you cannot obtain yourself.

Where will your next mortgage financing experience be?
Volumes of detailed important information are available to consumers right now but do you have the desire, time or where-with-all to effectively examine what's out there? It can be a daunting, frustrating task. To limit your frustration, consider using the expertise of a qualified and knowledgeable mortgage broker to help you understand the mortgage process and meet your financial needs.