Why It Is a Good Idea to Use a Mortgage Broker

by admin on December 16, 2011

For many Canadians, especially those who apply for a mortgage for the first time, this is the most frightening part of the entire home-buying process. It is about the substantial amount of money they are asking financial institutions to lend them. With this in mind, is it a good idea to use the services of a mortgage broker?

Certified financial planner Rona Birenbaum from Caring for Clients notes that it is recommended to consult a mortgage broker when renewing, refinancing, or buying a house. It is an efficient way to obtain a well-structured and well-priced mortgage. Instead of checking with a number of financial institutions, trying to negotiate with each one, it makes sense to use the services of a mortgage broker who will help with the entire home-buying process. Jessi Johnson, a Vancouver-based mortgage broker explains that brokers have experience dealing with all aspects of a mortgage. This includes finding out how much the client can really afford, choosing the right mortgage product, and offering advice on how to repay one’s mortgage loan faster (The Globe and Mail).

Obviously, it is important to find a good deal with a competitive interest rate, but many people do not know how to go about this. Over 50 percent of Canadians accept the first interest rate their financial institution offers, shows statistics by the Canada Mortgage and Housing Corporation. Not only do applicants settle for the first quote, but most of them do not use the services of a mortgage broker. This is unfortunate because there are other ways in which a mortgage broker can be of help. Mortgage brokers shop around for the best mortgage terms and rates in town and have access to a network of lending institutions. Among them are finance companies, credit unions, trust companies, major banks, and others. Lenders provide mortgage brokers with their interest rates regularly and even on a nearly-daily basis (Bankrate).

This is not all. Mortgage brokers review mortgage loans on behalf of clients a couple of times a year to see if the mortgage can be repaid faster and whether this is still the best financial product for them. It is unlikely that applicants will get these types of services from a financial institution. Persons who have little experience negotiating, have less-than-stellar credit, or are not sure what the right financial product is for them, are also advised to use the services of a mortgage broker. The major advantage of using a mortgage broker is that applicants do not have to approach financial institutions their selves, which is an undignified and laborious task. As a client, the applicant gives information about his earnings and assets, and the mortgage broker scouts the market for the best deals. 

Finally, it is a good idea to call a couple of mortgage brokers recommended by friends or people you trust. This is not a breach of etiquette, notes Mr. Savitt from the mortgage brokers’ association in our southern neighbor. This is one of the most important financial decisions in life, so why not see what everybody has got? (The New York Times)

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