When purchasing a home and applying for a mortgage, most people usually take the easy route: they go to their bank and hope for the best. Homebuyers tend to believe that their bank holds their best interests at hand, and with good reason. If you do business with them, if you are loyal to them, then you expect a good service. However, for various reasons, shopping around and seeing what other financial institutions have to offer is a great idea and can save you a lot of money. The problem? This can be time consuming, and if you’re not familiar with current market trends or how the mortgage process works then your search for a good deal on your mortgage can be an uphill battle. This is where a mortgage broker can help.
Mortgage Brokers are Independent of Banks and Financial Institutions
A mortgage broker’s job is to find you a mortgage loan tied to the most competitive interest rate. They do not work for the banks, and as such they are in the business of helping you find the best financial product on the market. They have access to dozens of different lenders, all of which compete for your business.
Knowledge and Experience
Mortgage brokers are up to date on the different financial products and services offered to you by lenders. They also understand how different financial variables can affect your mortgage qualification and what products are best tailored to your needs. They take into consideration your credit score, your down payment, yearly income and financial assets and analyze the different options available to you. A mortgage broker’s experience works in your favor.
Your Credit Score
Every time you negotiate a mortgage with a bank and your credit score is pulled, you are shaving some points off your credit score. Shopping around for the best mortgage can thus actually hurt you. On the other hand, a mortgage broker only pulls your credit score once and reaches out to lenders to find you the best deal.
A mortgage broker can also offer tips on how you should manage your finances prior to your mortgage application so that your credit history stays intact. They can also offer advice on how to deal with the expense of monthly mortgage payments so that your credit score looks good for future mortgage renewals or refinancing.
One of the many advantages of using a mortgage broker is that brokers deal with financial institutions in large numbers. They bring a lot of business to a bank, and often obtain volume pricing discounts. To illustrate this point, imagine walking into a bank on your own, and asking for a loan. Now imagine yourself, and 50 others, doing the same thing. Business done in bulk ends with better deals and increased discounts.
What about service costs?
This is probably the greatest benefit of using a mortgage broker. Their services are free. Lenders love doing business with mortgage brokers because it is cheaper to pay a mortgage broker than it is to have their own sales representatives take care of all the intricacies. Financial institutions save on operating costs, the mortgage broker gets paid by the bank, and you receive a better deal.
About the author: Cris Ravazzano is a writer and web strategist for Mortgages Canada. He writes about financial planning and various financial services.