You’ve made an offer on a property and it’s been accepted. Or, you’ve decided to remodel that dusty old basement and need to refinance. Or you’re mortgage has come up for renewal and want to explore better terms and interest rate. Now what? The only thing standing in your way of a more flexible life is securing the right kind of financing for your situation.
In the old days, you’d take a stroll to your local bank branch and ask for a mortgage. If you were offered a mortgage, you’d accept it no questions asked. But that was then, and this is now. There’s nothing wrong with visiting your local bank branch as your first stop, but it shouldn’t be your only stop.
By failing to shop around and discuss your options, you’re potentially leaving thousands of dollars on the table in interest savings—Not to mention banks are being stingier when it comes to approving mortgages for most types of mortgages these days.
Here is exactly why it’s important for you to consider using a professional mortgage broker:
Should I use a mortgage broker?
Yes, you should at least consult a mortgage broker. If anything, using a mortgage broker provides you with peace of mind. Even if you end up staying put at your current bank, at least you’ll have done your due diligence and you know you’re getting a good deal on your mortgage.
Likewise, you might even be able to get a lower mortgage rate with your current lender by shopping around with a broker. But rates aren’t everything, and a broker can also look at the various terms that suit your need—maybe you need prepay options, or a more flexible payment schedule.
You wouldn’t walk into a courtroom and represent yourself, would you? Worse, you wouldn’t let the defending lawyer also represent you, would you? Well by not using a mortgage broker and blindly trusting one single bank who is giving you the loan, you’re doing just that.
A mortgage broker should work on your behalf to help you find the best mortgage option. They can provide you with an unbiased option and select the lenders that make the most sense based on your financial situation.
Mortgage brokers also have access to lenders that you might not have access to off the street. Lenders that deal exclusively with mortgage brokers include monoline lenders, private lenders and pension funds. Without a relationship with a broker, you’re leaving those options off the table.
Reasons why you should use a mortgage broker
There are several good reasons why you might want to use a mortgage broker. Here are our top five reasons why you should use a broker.
- 1. Save time and money: When you use a mortgage broker, you can save time and money. Instead of applying at the lenders yourself and potentially lowering your credit score, your mortgage broker should do all the legwork for you. Not only can this save you time, it can save you money. If your broker finds a lender offering a mortgage with a lower rate, that could mean thousands of dollars in savings over the life of your mortgage.
- 2. Lower mortgage rate: Your mortgage broker may do a lot of business with some lenders, giving them volume bonuses, who can pass those savings on to you. Your broker should also be an unbiased negotiator. This means that they’re more likely to be able to get a better mortgage rate for you than you otherwise would be able to if you went directly to the lender yourself. A lower rate means lower payments!
- 3. Unbiased advice and greater choice: Your mortgage broke
r typically works with dozens of lenders. Client referrals are their lifeblood. As such, a good broker should want to ensure you’re fully satisfied by providing you with unbiased advice. They should choose a lender because they’re best suited for you, not because of the finder’s fee offered.
- 4. No cost (most of the time): Your mortgage broker is compensated directly by the lender, so most of the time there’s absolutely no cost to you as the consumer. The only time you might have to pay a fee is when working with a private lender or a lender who refuses to pay broker fees, but a broker will tell you in advance of those potential extra costs.
- 5. Protect your credit score: If you apply at dozens of lenders yourself, not only is it time-consuming, it can lead to a lower credit score. Here’s why – each time you apply at a lender, it results in a hard credit check. If you do too many credit checks within a short time span, it can lower your credit score. With a broker, typically they only have to pull your credit score once, helping protect your credit score.
As you can see, using a mortgage broker makes a lot of sense. Next time you’re in need of a mortgage, be sure to give your broker a call to see what the best options available in the market are for you.