Mortgage brokers either have a negative or a positive image depending on one’s background and personal experience but the truth is, mortgage brokers only act as an agent or a middleman between a borrower and a lender, although some may be more conscientious about their job than others.
What Does a Mortgage Broker Do?
A mortgage broker acts as the go-between for both the mortgage lender and the homeowner. Mortgage brokers work with borrowers to help them qualify for a loan or a mortgage while also working with lenders to connect them with homeowners who are in need of cash.
The communication between homeowner, mortgage lender, and mortgage broker isn’t like a three-way system. The mortgage broker talks to the borrower and the lender separately and negotiates agreements between parties. When the mortgage broker finds parties that are amenable to each other’s terms, the mortgage broker will then draw up the paperwork for the loan.
The above is possible because the mortgage broker already knows what both parties want. This is why mortgage brokers ask you a series of questions and go into personal financial details with you as part of the initial consultation.
Some financial information that your mortgage broker may ask from you include:
- Details regarding your assets such as savings and properties
- Your income (your pay stubs, tax returns, employment or business history)
- Your financial standing (including your credit score)
The above information are required to determine your capacity to pay and therefore, determine your ability to get a loan. In some cases such as when you’re after a mortgage refinance, your equity and current home value will be assessed to determine your qualifications and what loan type would be best for your needs.
More Than Just A Go-Between
Good mortgage brokers do more than simply connect lenders and borrowers. They take time to consider what the borrower needs and match them with mortgage lenders with terms that are within the borrower’s means. It is also not uncommon for a good mortgage broker to suggest another financial solution that may be of a better fit for the homeowner.
The mortgage broker will compare various banks and private lenders to determine the right fit in terms of fees, rates, type of loan, and risks involved. The final decision is made by the mortgage lender and homeowner, but a good mortgage broker will save both parties plenty of time and plenty of money in fees. In exchange, the mortgage broker earns by commission. This commission is just about nearly the same amount of money wasted on fees should a homeowner decide to do everything on their own instead of having a mortgage broker.
Getting a mortgage (or any type of loan) can be very tricky. It pays to have a seasoned professional, such as a mortgage broker, do the heavy lifting for you. Not only can we help you to understand what you are getting into, but we’ll also help you save time and money while making sure that we connect you with the right lenders. Contact us at Mortgage Central Canada today!