Professional Services In Toronto
The Process of A Mortgage Broker
In most instances, a mortgage broker acts as the middleman between lenders and borrowers, the process starts off with clients looking to refinance or purchase a new residential or commercial property.
When a potential client approaches a mortgage broker, and the broker vets multiple lenders and finds out the requirements and rates to provide options suited to each particular clients needs.
The broker then requests the client to provide documentation such as a letter of employment, pay stubs and a complete application that alludes to any other important details that may will be required for underwriting purposes and determining the client’s ability to qualify for a mortgage.
The mortgage broker in Toronto is responsible for analyzing the application and the numbers to ensure that the client falls within specific lending guidelines for the the lenders that will be approached on behalf of the client. Its very important in this case then to have a complete picture of the clients credit and income capabilities and to be able to provide mitigating information in the event it is necessary to meet certain mortgage refinancing guidelines.
In the event the client is approved, the funds are lent in their name, and the broker is paid a fee from the lender or borrower, depending on the complexity of the file. The broker only gets paid if the transaction closes.
What Are The Advantages of Using a Broker?
A broker can provide invaluable information on the mortgage market to clients who may not have the best of credit or not savvy with what institutions offer the best home equity loans and second mortgage terms. Many clients are unaware that a mortgage brokerage and take one application and submit the same to multiple lenders on their behalf, without having to pull their credit bureau report for each approval.
The broker can save you time because they possess a great deal of knowledge about lenders, repayment clauses, and administrative charges or other fees that can be hidden in lender contracts. But again, borrowers are still advised to perform their own research when looking for a mortgage loan.
Many brokers have inside knowledge on which lenders are the most favorable for any particular clients needs where debt ratios are concerned. The result is that a borrower will have a much better possibility of acquiring the best terms for a second mortgage or mortgage refinance, as their unique situation will be front and center in the approval process.
Are There Disadvantages ?
Not all brokers are competent! Some mortgage professionals work only part-time and hence have limited knowledge of underwriting criteria and will not be able to provide you with all of the necessary information you would need to get the best rates and terms.
Some brokers work with a limited number of lenders and therefore are unable to offer the best terms to a client, as they are not seeking to think of the box so to speak in the clients best interest.
If you have a very complex case that requires a non-traditional mortgage lender, you will end up having to pay the brokers fees which can we anywhere from 3% and up. In some cases, when borrowing money does not make sense, brokers should be transparent enough to share these findings with their clients, however, many seldom do.
Is There A Difference Between A Loan Officers And A Mortgage Broker?
Loan officers are usually associated with a lending institution like a bank. These banking loan officers can only offer you mortgage products being offered by their respective institution in most cases.
Alternatively, mortgage brokers represent their clients needs and interests and negotiate with multiple lenders on behalf of their clients. They also have greater access to non traditional lenders such as credit unions, mortgage investment corporations and private lenders to name a few.