Why Home Buyers Might Try a Mortgage Broker
By Krystal Lee
A home is most likely going to be the most expensive purchase of your life, yet according to a recent 2011 Canadian Mortgage and Housing Corporation survey, only 48 per cent of first-time home buyers choose to use a mortgage broker to help them navigate through the financial aspect of the home buying process.
A mortgage broker acts as a liaison between lenders and borrowers in order to provide you (the borrower) with the best available terms and rates. They will do all of the paperwork for you, and will usually work with dozens of lenders in order to secure the financing options for you.
When I started the home buying process earlier this year, I knew I was going to use a mortgage broker to help me secure financing on my first home. Here’s why:
A mortgage broker saves time and money
As a first-time home buyer, the most important advantage of a mortgage broker is their ability to approach and network with various lending institutions to try and secure the best terms and rates for you.
Scott Dawson, a mortgage broker for Verico Paragon Pacific Mortgages, suggests that a good broker can also be a consistent person of contact throughout the sometimes confusing home buying process.
“If a first-time buyer is going through the process alone, and going from bank to bank looking for the best rates, not only is it wasting their time, but they also won’t get the same level of service as they would by working with just one individual,” he said.
Not only is it easier to deal with one person as your point of contact regarding everything related to your financing, but if you are buying your first property, you will likely have a lot of questions to ask.
“You will want to find a mortgage broker that is willing to spend the time educating first-time buyers along the way,” Dawson said. “Additionally, brokers work outside of normal banking hours, so it’s convenient for clients to get a hold of us.”
The service is free for borrowers
Mortgage brokers work for you, and their service is completely free. So instead of charging you a fee, they are paid a commission from the lender once they close a deal. A broker’s commission can vary, depending on the type of mortgage you choose. For example, fixed terms typically pay more commission than variable terms, and brokers that bring in more business to lenders could receive additional bonuses.
Your credit rating is protected
A mortgage broker will only pull your credit report one time, and use it for all of the lenders. Whereas, if you went shopping for rates yourself, chances are that each lender would pull their own copy of your credit score. This can negatively impact your credit score in a hurry!
When choosing a mortgage broker, it is important to work with somebody that you can trust. Don’t be shy asking as many questions as you want, or speaking with several different brokers until you find one that fits your personality.