Who are mortgage brokers and who do they work for? The question is one I hear a lot these days.
Here in Canada, about 25 per cent of mortgages originate through mortgage brokers (versus about 75 per cent of mortgage dealers in the U.S and Europe).
Most people just walk into their local bank and fill out the paperwork and believe they received the best deal.
Well, the best deal for you, or for the bank?
When you walk into the bank, you will be shown only the products the bank has to offer. With the vast number of lenders and mortgage options available today, this strategy just doesn't make sense anymore. You will never know what other options are available without working with a qualified mortgage broker.
As a mortgage broker, I don't only deal with the major banks but other financial institutions that specialize in mortgage lending. Today's educated borrower realizes that utilizing the services of a mortgage broker will not only save them time and aggravation, but in most cases save them a substantial amount of money throughout the term of their mortgage.
Mortgage brokers work with borrowers of all credit types and specialize in being able to find a mortgage of any size and type on any given day. Most also will work with their clients on credit issues to improve their ability to obtain financing. They connect you to a lender and help you navigate through the steps the lender requires of you as well.
There is a misconception that a mortgage broker costs you money. In 90 per cent of cases, a mortgage broker is paid by the lender based on the dollar amount of the mortgage. In cases where he/she has to go to a private lender, or a lender who does not provide compensation for the mortgage broker's service, payment is made by clients and taken out of the mortgage's proceeds.
If you are being charged for the services of a mortgage broker, ask if they are also being paid by the lender. An ethical mortgage broker will not double-end on fees.
Vic Cotton is a mortgage professional and managing partner with mortgagesbrokers.com.
