/Hero%20Images/brooke-cagle-1181682-unsplash-1.png?width=2000&name=brooke-cagle-1181682-unsplash-1.png "Mortgage Broker vs Bank")
10 Ways a Mortgage Broker Helps
A mortgage broker is an independent, licensed mortgage specialist retained by the client (you) to help them get pre-approved and to shop the mortgage market (including banks, trust companies and other financial institutions) for the best terms and rates. Typically, a mortgage broker can be relied upon to:
1) Provide independent expert advice
Mortgage brokers are independent of any individual financial institution or range of loan products and are able to work with you to find the financing option that works best for your particular situation and needs. They are highly knowledgeable of the complexities of the mortgage industry and can help you navigate the market more effectively.
2) Negotiate on your behalf to obtain the best terms and rates
When working directly with a bank, it can be difficult to know if you are getting the best possible terms and conditions for your mortgage, or if there are even better options elsewhere. A mortgage broker has access to a wide range of lending options from different financial institutions and can negotiate with the various lenders to get better terms than you might have been able to obtain on your own.
3) Provide more choice than traditional lenders
Different lenders have different rules and requirements, so if one bank says no, there still might be others who will say yes. A mortgage broker keeps you informed on all of your options and helps you choose the right one.
4) Move things along
Buying or refinancing a property is long and complicated process. From documents to deadlines, mortgage brokers help keep track of everything and keep things moving in the direction of a finalized deal. From checklists to what-to-expect-next memos or status updates via email, we are here to streamline the process and all from the convenience of where-ever-you-are. Keep in touch via cell, SMS/text, email - whatever works to fit your busy schedule, coast-to-coast.
5) Help you understand and manage the income, credit, and equity requirements
To get approved for a mortgage, you must meet a number of regulatory conditions to ensure that you can afford the property you would like to purchase. A mortgage broker helps you understand and manage these requirements. They can help create a plan to get you where your want to be.
6) Get access to promotions, deals, and add-ons
There are a variety of incentive programs, deals, and add-ons that are available under certain circumstances. A mortgage broker ensures that you get the most out of the loan product and lender that you choose.
7) Provide access to their network of professionals
Mortgage brokers are well connected within the real estate industry and can often make a recommendation for other reputable real estate professionals such as realtors, lawyers, inspectors and appraisers.
8) Provide ongoing mortgage and financial advice
Even once the deal is signed a mortgage broker can be an invaluable source of information and advice that can help you make informed financial decisions for years to come. A relationship with a good broker can save you thousands over a lifetime and help make your next purchase even easier.
9) No cost to you
There is no charge to you for using a mortgage broker in most cases. Instead, brokers are paid a commission (referral fee) by the lender once your deal is finalized. Any special situation in which additional charges would apply must be disclosed to you up front.
10) No sales quotas, no pressure
Unlike most bank mortgage reps, mortgage brokers do not have sales quotas that they must meet. Instead, they can be relied upon to help you choose the loan from a lender that is right for you, without any conflict of interest.
Mortgage Broker vs. Bank
Ultimately, the difference between a mortgage broker and a bank comes down to the fact that a mortgage broker is on your side while the banks have profit motives and their reps have sales quotas. Banks will compete on rate if they have to, but they also know it is difficult and time consuming for you to shop around on your own. Further, they are not likely to recommend a competitor lender's rate or program even if it is better than their offering. A bank's business model is to cross-sell you on as many financial products as possible.
Mortgage brokers on the other hand are independent of any single bank or mortgage lender and only get paid (a commission from the lender, not from you) when they successfully fund your mortgage. This means they are able to shop around for you for the best rates and negotiate on your behalf with a variety of different financial institutions.
| Mortgage Broker | Bank Mortgage Rep |
|---|---|
| Access to a wide range of loan products with different features, rules, and lending criteria. | Only able to offer one line-up and one rule book. If you don’t fit, you’re out. |
| Experts in a wide range of mortgage products as well as the mortgage industry as a whole. | Expertise in their own product line-up only. |
| The right loan for the right situation. | Not likely to know or care if there is a better solution at a different institution. |
| Advice and help with credit or otherwise help you discover and take the steps to qualify. | Can only do business with you if you meet their terms and conditions and are ready to transact. Otherwise it's a no. |
| Represents you without conflict of interest. Forces the banks to compete with better terms and lower interest rates. | Banks want to maximize profits and get what they can, especially if you are unaware or inexperienced. |
| Service, consistency, professionalism or we won’t get referred by you. | Bank reps come and go. Your relationship is often with the bank, not a person. |
| Convenient access using modern technology, and no physical appointment necessary (unless you want to). Get your approval on-the-fly. | Less tech-savvy - more apt to require face-to-face appointments. |
How to Work with a Mortgage Broker
Working with a mortgage broker is as simple as understanding the process, learning, and reaching out.
The first thing they will need is some basic personal information to help them contextualize you and your situation. Be prepared to answer questions about your income, credit history, and down payment savings as well as details about where and what you would like to buy. This is an informal discussion and there is no pressure to do or commit to anything. We call this the Discovery Call. Here's a link to questions that lenders always ask.
After the initial discussion and if it looks like you could mortgage qualify right away, the next step would be to formally initiate the mortgage Pre-Approval process. This involves completing an application form, submitting various supporting documents, as well as a credit check. This process is quick and easy provided that you diligently and accurately provide the information and documentation as requested.
Once you have been pre-approved, you can begin the process of searching for and shortlisting potential properties. It is important to note however that a pre-approval is not a guarantee of a final approval. You still must get approved for the specific property of your choice, so always make an offer on a property subject to you getting mortgage financing approved. Once your offer is accepted, your mortgage approval goes Live and your mortgage broker will work with the lender to finalize your approval and secure your loan.
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