First things first - I know it's been a looooooooong while since I have written a blog.
I have no excuse. Frankly, I've been using our Facebook Page for most of my posts - but today's blog is one I want to have around for a while.
It doesn't contain the cure for cancer, and it won't make you rich...but it's a topic I am sure most people, who have mortgages, will appreciate.
It's a question of VALUE.
When it comes to your mortgage, and securing the most attractive interest rate and product...most people these days turn to a Mortgage Broker - they understand the value component and are willing to contribute a couple hours or so to the process because they end up saving THOUSANDS of Dollars in Interest Payments and can even knock off months or even years off the life of their mortgage debt.
But - not everyone understands the value positions brokers offer. And that is what this blog is about.
Here's a fun fact before we get too deep down the rabbit hole:
People will spend more time shopping for tires to save a couple of hundred dollars than spend the same time shopping for a better mortgage.
Isn't that nuts?!
Why in the world would people not put the same energy in to their mortgage??
Is it because they don't know there are better options? Do they think it costs them money? Are they afraid they may upset their bank?
Whatever the reason, there are too many people paying too much...and if it's because of a lack of understanding on what a GOOD Mortgage Broker can do for them - I am happy to provide some comfort to those individuals.
Here's a quick look at just some of the advantages of using a Mortgage Broker:
Yup! Free. Now, keep in mind, I'm referring to GOOD Mortgage Brokers. There are still a lot of dodgy ones out there that will try to charge Broker Fees, and even more surprising - APPLICATION FEES!
AVOID AVOID AVOID those types of brokers. They are only in it for themselves and are only interested in the pay cheque.
Brokers can do the job at no cost to the client - and still have a successful career - because they are paid by their lending partners, and they are paid well!
Lenders pay brokers well because they are the first line of underwriting. Brokers have lower over head expenses than a lender would if they had a "Boots on the Ground Building and Workforce" in every town and city in the country. Brokers generally work from an office with low rent. Brokers can complete their job with a great degree of mobility as well - there are plenty who work from home even...which to me is sorta weird, I mean - I sure as hell don't want to go to someone's house, and smell all their smells, to discuss my mortgage with them. But that's just me. Me - I'm going to a professional who works in an office environment where I know my information is secure and their pets or children are not going to throw up on it.
GOOD Brokers are used to working under pressure and generally prioritize their clients and attend to their needs quickly. First because a GOOD Broker knows that YOUR TIME IS VALUABLE, and secondly - it's to their advantage to get it off their desk quickly in order to move on to the next mortgage.
Not to be "That Guy", but have you ever tried booking an appointment with your bank?? It can take WEEKS to get in to see them...and when you get there, the process can drag on even more...oh, and you'll pay too much and wish you went to a broker.
Seriously, all you gotta do when using a broker is bring in some requested documents that prove your income, prove your identity, and prove you have your down payment...the rest of the work is taken care of by the broker.
The broker is the one who's going to engage on your behalf to secure the best mortgage product, with the best privileges, and at the best rate! The broker is going to handle the paperwork, the discussions, and is the frontline of underwriting to make sure your mortgage goes through. A GOOD broker uses the relationships they have with their lenders, underwriters, fullfillment personel, insurers, lawyers, title office, realtors, and more - in order to make the process as simple as possible for their clients.
While I'm at it...let me just kill an old wives tale about what mortgage brokers say they do, but dont. A lot of brokers like to promote that they negotiate on their clients behalf...
ahem, THEY DON'T NEGOTIATE SHIT!
Yeah, I said it...because it's simply not true!
Any mortgage broker who tells you they are "negotiating" or are "making their lenders fight over you" is FULL OF IT! It's an insult to the industry as a whole when this ploy is used.
ANY MORTGAGE BROKER WHO SAYS THEY ARE NEGOTIATING ON YOUR BEHALF IS SELF ABSORBED AND FULL OF CRAP....JUST LIKE A DIAPER!!
Brokers don't do this!
We haven't done this for over a decade - but that doesn't stop BAD brokers from promoting it.
Want to hear something equally damning?
Brokers don't have the power to negotiate anything!
The Mortgage Insurer and Mortgage Lender set the rules, conditions, and the pricing. Brokers have a bit of movement with adjusting an interest rate - but by no means are they "negotiating" anything with the lender. That is just plain old B.S.
Fun fact when it comes to interest rates - Lender's don't negotiate.
Do you really think they give a damn about a mortgage for a few hundred thousand dollars they'll make .10% or even .50% less on when they have hundreds of millions of dollars at their disposal to lend? They don't. They get hammered with hundreds of applications a month from hundreds of brokers and no single application is going to bring them to their knees because a broker is negotiating on a clients behalf. It's just ridiculous.
Hahahaha...okay, I'm done with that.
You got my point though right??
Mortgage Brokers have access to dozens of lenders...and each of them have dozens of products...now, consider a Retail Bank - like TD, SCOTIA, CIBC, RBC, BMO, etc....they are individual lenders...with only a handful of products. They can only offer you the products and rates they have in their branch. They have to manipulate the client in to fitting one of their product offerings - they can't taylor a mortgage to fit the client.
On the other hand, Brokers can access a library of products and rates and can generally hone in on the best product and rate combination that fits the client. Some clients want a fixed rate with the ability to pay interest only payments and have the ability to port that mortgage from one province to another. Some clients want a fully stripped down interest rate with few or no prepayment privileges. Some clients want a mortgage that provides them with a Line of Credit with full accessibility as they pay down the principal on their mortgage - on and on and on and on it goes.
Mortgage Brokers can do that! And it's not that difficult. We have the tools all around us. And a GOOD Mortgage Broker knows how to use them!
Nobody likes to admit they've made a STUPID MISTAKE! And more often than not - when we do make a stupid mistake, especially if we can get away with it, we'll pay the cost and accept the consequences and move on like it didn't happen.
Ummmmm....if you've signed a mortgage with a Retail Bank in the last 10 years and you knew about the advantages of using a GOOD Mortgage Broker...I'm not saying your stupid...but I am saying - you are paying the cost!
All is not lost though if you are in that situation...that's the beauty of mistakes, we are able to learn from them and avoid them going forward.
Using a mortgage broker to get a mortgage at a lower rate, with enhanced pre-payment privileges, at zero cost, and at an accelerated pace seems like it's too good to be true.
So...think your time is valuable enough now to call a GOOD Mortgage Broker when you need your next mortgage?
That's my rant for the day! I hope you take something positive away from this and you found something useful.
As always, be good to each other.
Say "Hi" to a stranger, and do good things for everyone around you.
Keep on being awesome!