Saturday, September 22

6 Questions to Ask Your Next Mortgage Broker

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Mortgage brokers are experts in securing mortgage funds for people buying real estate. They work for the borrower, not the lender, so they have your best interests in mind.

Mortgage brokers have the expertise to successfully secure mortgage funding and the knowledge to help save you money on your mortgage costs over the long term.

Following are six questions you should ask before you decide which broker to use:

1. What types of mortgage are available to you?

Mortgages come in all shapes and sizes. Make sure you know what types are available, whether it’s a fixed rate or variable rate, how long the term is, can you lock in later if you have a variable rate mortgage, is the mortgage portable if you decide to sell the home and buy another?

2. How does the broker get paid?

Most mortgage brokers get paid by the lender or financial institution that provides the mortgage to the client, but make sure you ask this question before you agree to use their services. You don’t want to receive a large, unexpected bill from the broker once the mortgage is obtained.

3. Which financial institutions does the broker work with?

Do they only use the “major” banks, or do they have secondary or alternate types of lenders they can access? If so, is there a higher risk to the borrower for using a lender that isn’t a recognized chartered bank? Mortgage brokers may have access to funding options through credit unions, trust or insurance companies and sometimes even via private funds.

Make sure you understand which type of lender you will use for your mortgage before you sign on the dotted line.

4. Is it more risky to get a mortgage through a mortgage broker?

While the mortgage broker is responsible for finding suitable mortgage funding, the home buyer is the one who signs the mortgage paperwork directly with the lender. The mortgage broker simply facilitates the transaction by introducing the lender and borrower to one another. The borrower should understand the risks associated with the type of lender before the transaction takes place and should ask the mortgage broker those questions ahead of time.

5. Why should I use a mortgage broker instead of just going to my bank?

Mortgage brokers have access to a broader range of lenders than an average home buyer. It takes a lot of time for a buyer to approach several lenders on an individual basis, making it inconvenient and nearly impossible if the buyer is on a deadline for securing a mortgage. The mortgage broker can find out what mortgage options are available to a buyer, in a very timely manner, ensuring any tight deadlines can be met.

6. Does it reflect on my credit rating if I use a mortgage broker?

No. Using a mortgage broker simplifies the process of securing mortgage financing, but they are just the “middle man”.  They do the legwork for you, but are not providing any actual credit, so they don’t have an impact on your credit rating. And, if your credit is not great, they may have access to less traditional lenders that are more flexible with their lending criteria.

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Fiona Thompson

Staff writer / Avid internet junkie / Devoted music aficionado

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