What is a Mortgage Broker?

A Quick Overview

So, what is a mortgage broker and why should I use one? Perhaps you are already familiar with obtaining mortgage broker loans. If not, this "what is a mortgage broker" page may be a big help to you.

If you aren't, I'd like to enlighten you. My wife and I first started using a mortgage broker years ago and have never looked back since.

When we lived in Dartmouth, Nova Scotia, we used Rod MacInnis from The Mortgage Centre.

When we moved to Lethbridge, Alberta, we used Sue Maier from The Mortgage Centre. (Hey if you get great service, why change.)

A good mortgage broker will save you time, money, and frustration.

For the most part except for some special circumstances, they are free of charge and work on your behalf, not the bank. We personally never paid a cent for the service.

What is a Mortgage Broker?

A mortgage broker works for you, not the bank or the mortgage lender.

The mortgage broker's job is to find you the best interest rate and terms for you.

The mortgage broker "shops" many lenders and finds the best fit for you.

What is a Mortgage Broker?

A good mortgage broker, will find you a lower interest rate on your mortgage broker loans than you will probably ever find on your own.

The reason for this is, they shop your mortgage to many lending institutions. It creates almost a bidding war to obtain that mortgage.

If you go trotting off to your own mortgage company, it is just you and the banker. Many of us feel small and powerless as the mortgage lender sits behind their desk and tells you their 3 or 5 year term rate.

They may or may not discuss options we may consider to save us more money.

They just assume and many of us do, that we have to accept that interest rate.

The mortgage we personally have now is locked in for a 5 year term at 3.79%. Neither of our 2 personal banks could even come close to that rate, at that time. Cha-ching! Mama can afford a new pair of shoes! :-)

Our mortgage broker(s), also took the time to explain several different options available to us and what we could realize in savings. Just going to a bi-weekly mortgage schedule made a big difference.

* A Mortgage Lender at a Bank.

* A Car Salesperson at a Car Lot.

* A Mortgage Broker.

The Banker works for the Bank.

The Car Salesperson works for the Dealership.

The Mortgage Broker works for You.

The Banker's main job is to make the maximum income for the bank.

The Car Salesperson's job, is to make the maximum income for the dealership and him or herself.

The Mortgage Broker's job, is to look after their client (which is you), to save YOU money.

Note: There is absolutely nothing wrong with the Banker or the Car Salesperson. That is their job!

Does that help see the big picture? Do you see the difference? Great!

What is a Mortgage Broker?

Lets face it, most of us are busy. Another big plus when you use a mortgage broker is saving you time. Why?

* You arrange a time at your convenience, to sit down with the mortgage broker, with no distractions and no feelings of being rushed. You discuss your situation and they go to work.

* The mortgage broker then shops the mortgage market. This would take you a huge amount of time.

* The mortgage broker arranges everything for you, including all the mortgage documents. There is no 2nd, 3rd or 4th visits to the bank.

- We actually have never stepped into any of the buildings where our mortgages were held. It may not even be in your area. It may be placed in a different city, state or province.

Remember, they are shopping the best rates and terms for you. Imagine trying to do that on your own!

* Whenever everything is ready, you again arrange a time of your convenience and sit down with your mortgage broker. They go over all the details with you and if everything is OK, you sign some papers, and you are on your way.

* That's it. The next step is when you make your first mortgage payment.

What is a Mortgage Broker?

Lets be real here. As much as I'm a big fan of mortgage brokers, they aren't doing this for free. Right?

Of course not. The mortgage brokers are paid by the banks and mortgage lenders that your mortgage is placed with.

The lenders pay this fee because they now have a mortgage in place, plus perhaps a repeat or lifetime customer.

Don't fret now, the mortgage lenders will still turn a profit on your business. This makes using a mortgage broker a win, win, win situation.

You win with better rates and terms.

The Mortgage Broker wins by being paid by the lender.

The mortgage lender wins by making a profit from your mortgage.

Note: There are times when a mortgage broker may be paid by their client. This may be on a business type transaction as an example.

The one that may concern you, might be if you just can't qualify for a mortgage at a regular mortgage lender, like a bank or a credit union.

If the mortgage broker has to go looking for say private funding because your credit has been bad in the past, you may have to pay a fee for their service. This will be disclosed to you before they proceed.

What is a Mortgage Broker?

Probably yes. Mortgage Brokers are almost everywhere that there is a modern mortgage system.

At the time this page was written, in countries such as Canada, United States of America, Australia, New Zealand and Spain, the majority of mortgage transactions are handled by a mortgage broker.

I hope for those that aren't all that familiar with the role of a mortgage broker, that this page on "what is a mortgage broker" has been helpful to you.

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