Whether you are a first time buyer or existing home owner, you are not alone in the confusion of terminology and details within the real estate industry. Many people are often confused by the roles specialists play in the process. Many people often confuse lenders and mortgage brokers and remain unsure on what exactly a broker is.
This can be easily explained. A mortgage broker facilitates a relationship between borrowers and lenders. They offer people looking to purchase a home various loan products and packages from a number of different lenders.
The lender is the financial institution which actually provides the loan money to facilitate the purchase of the home for the borrower. Brokers can work independently or within a company or firm, but their role is to facilitate a productive relationship between the chosen lender and the borrower, serving as a liaison while the financial deal is being organized.
The mortgage broker doesn’t actually loan any money. They work with the borrower to assist them in finding a mortgage product which suits their needs and requirements. Mortgage brokers are familiar with many of the different products available in the marketplace and by learning the details of the borrower’s requirements can shop around to find the loan deal which is best suited to those needs.
Brokers forge a number of relationships with a variety of lenders. Some brokers actually have access to mortgage products from hundreds of different lenders. This can allow them greater access to loan packages and deals which can suit the needs of each specific client. They are more able and likely to find packages which can suit individual needs such as problem credit, than single or individual lending institutions.
Mortgage brokers are able to make finding a mortgage deal or package simpler for the borrower. They accept the application from the borrower and look to lock in terms and rates with specific lenders who best suit the client’s needs.
They provide federal and provincial disclosures and can gather all the documentation necessary for the application including verification of employment, disclosures of assets, credit reports and appraisals of properties. Once the application file has been completed, the mortgage broker will then submit it to the selected lender who will then deal with approval and disbursement of the loan.
Mortgage brokers can provide expert guidance and advise to steer you through the home buying process. They will very often provide some basic level of credit counseling to attempt to help borrower’s correct issues on their credit file. They can also provide advice for borrowers on ways to improve their credit and obtain more favorable loan rates and packages. Mortgage brokers are also happy to answer borrower questions and ensure that they understand the process of the application and all the terms and details of the loan.
A mortgage broker will only provide advice and assistance before the completion of the loan process. Once the mortgage has been obtained, the borrower will gain a point of contact directly with the lender who will answer any questions and resolve on going issues. Broker’s fees are usually paid indirectly by the borrower as part of the closing costs or additional points on the loan. This is only applicable on successful loan applications where they facilitate a relationship between the lender and new borrower.
If you are interested in learning more about mortgage brokers or are looking for assistance securing a competitive mortgage deal for the purchase of your new home, contact us. We have an extensive panel of lenders to facilitate finding the best deals and packages for our clients and would be happy to assist on your home buying journey.