Debra Williams BBA
September 2010...So you think you want a mortgage broker?
Good for you. You’re about to make what is likely the most significant purchase of your life; it’s good to get some financial advice. Stop thinking of a mortgage as a big fat loan – and start thinking of it as a tremendous financial tool. Properly structured, the right mortgage can build your wealth, protect you from a financial downturn, and save you thousands of dollars. An experienced, skilled mortgage broker is going to give you the best overall view of what’s out there for you in the marketplace – and can tailor a mortgage that suits you perfectly.
Firstly, understand that your bank – great as they are at your day-to-day banking – may not always be the right choice for your mortgage. That’s because there are many options for getting a mortgage in Canada – including about 50 major lenders. Your bank represents one available lender – and it doesn't always make sense to restrict yourself to a single lender. That’s where mortgage brokers come in. Homebuyers are increasingly savvy, demanding more information, more choice, and better value with their mortgages. And that’s why they’ve been increasingly turning to professional mortgage brokers, who can offer almost instant access to rates and features from a huge range of lenders.
How do you pick a good mortgage broker? Here are a few questions to ask:
1. How long have you been a mortgage broker? Experience is critical, as it is in every industry. But sometimes a fresh young broker is working with the support of an experienced broker – so ask about that person too. Your young broker may be dynamite – and can lean on a more experienced planner if needed. It’s actually a good sign to see this kind of mentoring in the workplace; it shows they’re in it for the future. Don’t be afraid to ask what the broker’s annual volume is. A broker doing over $10 million annually is not that "young' in terms of mortgage transactions experience..
2. Do you have your AMP designation? The Accredited Mortgage Professional designation means that the broker has professional training, and meets certain ongoing education and professional requirements.
3. How many lenders do you work with? While there are over 50 in the marketplace most brokers work with a shorter list, where they are able to get to firmly know the company and their guidelines. You want to be sure that your broker has a solid stable of lenders, but you don't want all of their business going primarily to just one, otherwise they likely aren't being as objective as they should be, unless they specialize in a specific product that is only available through that lender.
4. How much of your business is referral business? Where the business comes from says a lot about the broker’s service. The best brokers receive a very high majority of their business from referrals from satisfied customers.
5. Do you charge fees? For most standard "conventional" deals, brokers don't charge fees. They may charge a fee if the lender isn't paying a commission or where the deal is complex and takes considerable time to package and close. Charging fees isn't necessarily a negative, you just have to understand the situations where they are charged.
Trust your instincts. A good mortgage broker will look professional, will have a high-quality website or other materials, and will make you feel comfortable asking questions. After they’ve told you what they’ll do for you, ask them what happens if your mortgage isn’t approved. A good broker will work with you – to help you improve your credit, for example. If the broker is just interested in the deal on the table, move on.
The right broker will make a significant difference in your financial life. When you’ve got a partner to help you achieve your financial and homeownership goals, you’re on your way!
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