Are you on the hunt for a mortgage broker? Or you need a mortgage broker but just don’t know it yet!
First up, where do you find a Mortgage Broker?
The easiest (and one of the best places to start) is with referrals from a real estate agent, family, friends, or co-workers. But that’s just the start! There are thousands of independent mortgage brokers out there for you to partner with. So, what should you look for? That’s part 2.
What to look for in a Mortgage Broker?
When you are looking for a mortgage broker AND looking to buy a home that can lead to a very stressful time in your life. To make it easy, here are a few things that a broker should be doing for you:
1. Rates Don’t Tell the Whole Story.
Getting a mortgage, refinancing your home or consolidating debts should not be seen as a quick and effortless task. There are brokers and financial institutions that make borrowing all about the interest rate, and that is just not the case. Be wary about Brokers who guarantee you a mortgage without asking for any personal information or documentation. Over the years personal lending has changed and continues to. With stricter than ever documentation requirements, lending policies, and tougher credit checks, it’s important to be working with a broker who is educated. It is also important to work with a mortgage advisor who asks to see the FULL picture. That means a little more work on your end to get all the proper documentation, but it can make a world of difference when it comes to selecting the right mortgage product for you.
2. Experience Really Matters.
Maybe you have a bad credit score—or a larger car loan—or maybe you are self-employed. Whatever your unique situation is, you want to work with a broker who knows how to help you navigate through it to get you the best mortgage product. Yes, someone who is new to the world of home loans and personal finance may be smart, fully versed in policy and products and able to offer a great rate, but that doesn’t necessarily mean they are prepared to handle your situation. Try to find someone who has worked on a wide variety of deals in a wide variety of situations. A few questions to ask:
- Have they had to work through someone’s debt in order to make a deal viable?
- Do they know what to do when a deal doesn’t go as planned?
- Are they experienced in handling your unique situation? (ex. Working with someone who is self-employed, etc.)
3. Think Big Picture.
There are many different pieces to your personal finance picture. From credit cards to student loans, they all fit together to create a credit report that is unique to you and only you. With that in mind, a good mortgage broker should take time to find out about your goals—both long term and short term. They should ask you if:
- This is a starter home or long-term home?
- Are you planning on expanding your family (ex. having kids soon)?
- Do you have kids who are heading off to university and may have tuition payments to make soon?
- Do you have a parent who may need long-term care in the future?
All of these things can directly impact your finances, and in turn, give direction to the mortgage broker on what you will need in a mortgage product. Asking these questions and others gives the mortgage broker a broad financial picture which gives them the perspective and knowledge to make an informed recommendation.
4. More than a Number.
It’s no secret—mortgage brokers often will have sales/volume goals that they want to meet to take advantage of incentives. However, a good broker will set you up with the right product, mortgage rate, term and conditions that work for YOU…not them. They should be able to see past their own targets and goals and work with you to not only reach your goals but surpass them.
A satisfied, happy customer can turn into a life-long customer (and they bring friends and family with them too!) This is what a good mortgage broker should be able to see and portray to you. You should never feel rushed or like you are “just another number”. If your mortgage broker is focused on only one product or simply puts you into a 5-year rate without asking about your goals, it may be time to ask some questions.. You should never be given a mortgage without full explanation, details, and understanding of why that product is right for you.
5. Save Time—don’t shop.
Over the past few years the idea that you can “shop” your mortgage around to different brokers to get a better rate has been made quite popular. The reality? 95% of the time every broker will end up offering the same rate for the same product. That’s not to say that there are not special rate offers out there—but they do typically have a specific requirement such as quick closings, shorter amortizations, higher down payments, limited repayment options, and smaller lenders. These are sometimes used, but for the vast majority of the population do not fit their needs. A general rule of thumb is that if a mortgage offer appears too good to be true, then it is.
A Final Note
With all that said, we find that borrowers who:
- take the time to seek out an experienced broker
- give an in-depth picture of their financial goals to their broker
- look for a broker who has a background in handling cases similar to theirs
- keep themselves financially in a good situation through debt repayment and budgeting
- avoid “shopping” for rates
Are the ones who breeze through the mortgage process. It’s important to look at your mortgage as not just a singular deal all on its own; it’s a part of a much larger picture. A mortgage should allow for you to live your life comfortably but realistically—making sure that other needs and obligations (vacations, healthcare, emergency savings, education, etc) are all considered and balanced with their mortgage/loan requirements. Finding a broker who understands what BALANCE looks like is the key to making the home-buying process as simple as possible.