Thursday, March 22, 2012

Why Use a Mortgage Broker?

In all honesty I probably should have also rolled up into the title "Why Realtors refer Mortgage Brokers" and "What Does a Mortgage Broker Do".  Maybe even add in "Which Mortgage Broker Do I Use".  Basically all of the above is what this post is about.

Anyone that has followed the mortgage market for a few months has seen rates go up and down, this bank has the best rates, now its this bank, and then there is the bombardment of mortgage brokers and agents all contesting that they have access to the best rates.  Well it is true that banks and wholesale finance lenders take turns winning the rate war and most of them are accessible through the mortgage broker market.  What is a bit of a myth is that one broker has the best rates over another.  Having said that, it is true that some brokers do get discounts from certain lenders for high volume and a high success rate for funding ratios (deals submitted vs deals closing).  But you have to be able to fit the model that particular lender is looking for.

So, you want to pick a brokerage that is large enough to receive special treatment from several different lenders, because their volume is so large.  For the perfect model mortgage seeker (good income, down payment and credit) our lender of choice varies from month to month depending on who has the best rates and terms at the time.

Not everyone fits into the perfect model that banks seem to love.  This is really where the importance of a good mortgage broker comes in.  Seriously, I cannot stress enough how crucial this is.  And this is why your Realtor may have referred you to a mortgage broker.  If you do not receive a pre-approval certificate, or are told no if you ask for one, you may want to look elsewhere for your financing.  When I give a pre-approval that Realtor knows they are not wasting their money and spending time away from their family showing homes.  Yes Realtors have lives, they are people and it costs them a lot of money and time to help someone find a home, so they want to be certain you are solid. 

Your Realtor is helping you purchase the largest item and your biggest investment you will ever make in your life.  Give them the love they need to go to bat for you.  Do not hide stuff and think you are at war with them, they are on your side and you will benefit by becoming a team with them.  If you are in the Southern Ontario area, I have a lot of excellent Realtors I have a relationship with, that I would happily refer for you.

Now, why use a mortgage broker?  I can be reached by text, by office phone, by cell phone, by email, by bbm, on weekends and evenings and I enjoy it.  Why seasoned Realtors usually refer a mortgage broker instead of a bank is because they are aware of the many variables required to qualify and that all banks have different variables.  Here is a short list:
  • Some lenders do not like self-employed.
  • Some lenders will actually gross up self-employed income to qualify for more.
  • Some lenders include baby bonus, others don't.
  • Some will let you use your car allowance to qualify.
  • Some will actually tell you your bonus doesn't count as income.
  • Some don't like commission income.
  • Some don't like contract workers.
  • Some want perfect credit.
  • Others will accept the bare minimum.
  • Some have cash back, most don't.
  • Some let you purchase two homes with 5% down.
I could go on and on.  So a seasoned Realtor understands that it is impossible for one bank to successfully look after all their clients.  So they refer them to a mortgage broker who knows and has access to all the lenders.  As well knows the home buyer will be well looked after, educated and most importantly happy with the results.

Feel free to post a comment or question.  If you would like to talk to me about mortgages or get the name of a good Realtor, feel free to contact me whichever way works best for you.

Ron Miller
YouTube Hamilton Broker