7 Services a Mortgage Broker Provides That Banks Don’t
Many homebuyers do not know whether to call a bank or a mortgage broker when starting their mortgage shopping. Many homebuyers or homeowners believe, mistakenly it turns out; they will find a better deal at a bank. In fact, the opposite is usually true.
Here are seven great reasons why borrowers and homeowners should avoid a national bank, a community bank, or a credit union when applying for a home mortgage, refinancing, or renewing their mortgage and what they should look for when choosing the right mortgage broker for them.
How will you be treated when you shop at a bank? Think back to the last time you called a bank’s customer service department. Remember how they put you on hold and transferred you around? If that is how they treat their existing customers, how will they will treat a prospect? You will be assigned a number and from that moment on, the bank’s mortgage staff will know you by that number.
A licensed mortgage broker who works for you offers personalized, one-on-one service. Ideally, they will be very communicative and proactive, anticipating requests for documentation and other conditions. Mortgage Brokers do not get paid until they close a loan so they have a great incentive to fight to get your loan closed. The ideal mortgage broker will be a very friendly, positive person who will keep you constantly updated as to the status of your loan application.
Even if you have great credit, steady employment, satisfactory income, low LTV, and an acceptable property value, you will be asked to provide many documents before underwriters approve funding.
Knowing what the banks will ask for in advance is one of the big bonuses of using the services of an experienced mortgage broker. Anticipating a lender’s loan conditions can save hours of frustration. One of the most important things a good mortgage broker can do is assemble a comprehensive document package from the borrower before submitting the loan to a lender. When the underwriter gets a complete package, it eliminates time wasted going back and forth as the underwriter demands documents from the borrower, who must respond with the documents or risk losing the loan.
Great mortgage brokers know how to overcome lender obstacles creatively without losing their cool. Underwriters often respond to loan packages with conditions that defy reason and common sense. When nonsensical conditions are passed to borrowers without explanation, as is often the case in big banks, borrowers become confused and frustrated and often times respond with documents the underwriter did not ask for.
Great mortgage brokers are not rattled by strange condition requests and give careful attention to the request before planning a precise response to clear the condition. This may mean helping a borrower to write a letter of explanation, or calling a credit card company with the borrower to get an item cleared from a credit report. A great mortgage broker goes the extra mile for his client. You have your own personal advocate working strictly on your behalf.
A smart mortgage broker educates his or her customers on how rates are formulated. They do all they can to get the borrower the lowest rate available. The lowest rate is not always the rate you are quoted the day you first make contact with the lender. The most important rate is the rate you get when the loan closes and funds. These can be two very different things. For example, you make a call to your favorite lender and on the day you first call the rate is 4% so you ask the lender to lock it in for you. Since you have requested it, the bank employee will lock your rate on a 30-day lock.
The problem is that most banks take longer than 30 days to fund a typical loan. If you are locked in for 30 days, guess what? You will end up paying extension fees and that can reduce or negate any savings you may have had coming. The experienced mortgage broker lets the client know that they will lock the rate in for them when rates are favorable to the borrower and also when they can do a lock for a period of time that will cover the time it takes to underwrite and fund the loan. Sometimes it is best to wait until the appraisal comes in before locking a rate to give some cushion to the lock period.
Brokers are paid on commission, generally speaking, and brokers usually have no preference which loan the borrower chooses. At banks, executives offer incentives to their loan officers to push certain loans. These loans are lucrative for the company, but may not benefit the borrower. Consumers are served best when they are presented with options in an objective manner.
Experienced brokers offer a variety of loan options tailored to the borrower, and explain the pros and cons of each. The options the mortgage broker presents should be based on their conversations with the borrower and the mortgage broker should know how to ask the right questions to find precisely what the best options are that provide the most benefit.
A good broker shops lenders to find the best rates. Since brokers get wholesale rates from the big lenders, brokers can pass these savings to borrowers. Usually, the mortgage broker makes his/her money from the rebate paid by the lender to the broker for selling an interest rate that is higher than the “par” pricing rate. But the fact is that these rates are still much lower, on average, than a borrower can get when he goes directly to the lender. A borrower in a bank pays that bank’s retail rates, which are usually higher than wholesale rates.
Canadian laws require that all mortgage brokers be licensed and have a knowledge of financing. Because of the strict licensing requirements, all licensed mortgage brokers pass rigorous testing and background checks, including fingerprinting and criminal background checks. Professional and licensed mortgage brokers will have good financial history and no criminal convictions.
It is very important you trust your mortgage professional since you will be trusting him or her withyour most private financial information when applying for a loan.
Ask your mortgage broker to see written testimonials and speak with your mortgage professional directly with any questions or concerns you may have. After having an open conversation with your mortgage broker professional you will clearly see that he or she is the are the right fit for your needs.
Using the services of an experienced, trustworthy, licensed mortgage broker offers benefits to homeowners seeking a mortgage refinance or new mortgage that a bank just does not provide. Contact us anytime, we would love to speak with you!