February 11, 2009
Why use a mortgage broker?
A question that I have been asked many times is why should I use a mortgage broker as opposed to going into my bank and requesting the loan on my own.
The truth is you could very probably go into your local branch and get a mortgage fairly easily. They already have you as a client they have a good idea what your net worth is, because you have all of your accounts, RRSP’s, and possibly lines of credit with them.
You may very well be offered a good rate, but more often than not the bank will not offer you their best rate. The bank has a handicap in that they can only sell you the programs that they themselves offer. Bank A can’t sell you a program that Bank B offers, so their only option is to sell you on the merits of what they do offer, as if it was the greatest thing since the invention of sliced bread. Their program may very well be excellent for certain situations, but not necessarily the best for your circumstances.
You are a bright individual, and have decided going in, that you were not going to take the first rate, or deal with the first bank you see. Great, you are able to muddle through all the different programs offered by each bank and are ready to make an informed decision based upon your visits to 5 or 6 lending institutions. There are two drawbacks to this exercise.
1) You have put in an offer to purchase a home, and according to the promise to purchase you have a limited number of days to show that you have procured a mortgage. Can you truly find the time to run from one bank to another to secure a mortgage? The answer for most people is no.
2) Most consumers don’t realize that every time you approach a bank for a mortgage and they do a credit check, your beacon score tends to suffer because there are too many reports requested within a short period of time.
Therein lies the beauty of going to see a mortgage broker. The broker will only check your credit once and within the hour you will have virtually visited 20 lenders and chosen the best program and rate for you.
Are there drawbacks to visiting a mortgage broker? There are always drawbacks in whatever you do, and finding a trustworthy broker will eliminate some of them. Word of mouth is certainly a good indicator as to whether the broker is a reliable individual with your best interests at heart. Requesting references from satisfied clients is a route you may want to follow because you are making one of the largest purchases in your life and you have to feel absolutely comfortable and confident.