Six Tips For Choosing The Best Mortgage Broker

If you are currently looking for a mortgage and have decided to enlist the help of a mortgage broker, then you’ve made a smart move. The next step is ensuring that you find the best mortgage broker. How do you do this? Gather as much information as possible and ask important questions. Here are some key things you should know about the broker, as well as the ways in which you can find this information.



    Judge by Experience

    The mortgage brokerage industry does have a fairly high turnover rate, so it is important to know how long the broker has been in business. This helps to determine if the mortgage broker is a seasoned professional who has been through hard and good times, as opposed to a newbie who has just come in.

    Ask About Mode of Compensation

    Brokers are generally compensated in two ways: fees and yield spread premiums. Fees are a percentage of the loan amount, while yield spread premiums are direct compensation for signing the borrower up for a higher interest rate than what they would have otherwise opted for. While the latter may be a bit controversial, they are actually suitable for borrowers who cannot afford the upfront costs associated with the loan. If you can’t pay upfront, then you pay over time. Ask the broker about yield spread premiums before signing anything.

    Ask About Rate Locks

    Rate locks are a way for some brokers to speculate on the rise and fall of interest rates—often at the borrower’s expense. Ask the broker about rate locks and how they handle them. However, to prevent the broker from doing any kind of speculation, it is best to get something in writing.

    Ask for References

    Ask your broker for references. If he/she has satisfied clients, then it’s best to ask them directly, and they will give you honest answers.

    Surf the Internet

    Do some background checking on the mortgage brokers. See what their credentials are and whether they are licensed and listed. There should be an online directory for registered brokers.

    Interview At Least Three Brokers

    You should have a shortlist of at least three mortgage brokers before deciding on the best one. Compare them and see which one you feel most comfortable with.

Deciding on a mortgage broker can be a detailed process, but making the effort could save you thousands or tens of thousands of dollars in the long run. If you are in search of a mortgage broker, then contact us today. Our specialists can help you find the best mortgage for you, and we will be more than happy to answer all your questions.

source:  northwoodmortgage.com

What Options do Brokers Offer that Banks Don’t?

Brokers versus Lenders

A broker’s job is not just to provide a mortgage; it is to find the best possible mortgage for a client’s situation among multiple lenders.

A good broker will shop around between many different banks and credit unions to find the best mortgage product for the client. This is a fundamentally different service from banks or other lenders.

While a broker’s purpose is to find the best mortgage for a client, a bank’s purpose is to sell the client on the bank’s products.

Advantages of Going through a Broker

Mortgages are complicated affairs with many hidden costs. Many first-time home buyers choose mortgages strictly based on rates. However, they end up getting fleeced by fees, pay restrictions, and refinance policies.

This is especially true for people with variable income or bad credit, who need more flexible mortgage options. A broker can help find a mortgage product specifically designed for any needs.

Best of all, a mortgage broker has a good understanding of value, and can find the best new offers from a variety of lenders. Every time a new mortgage product is rolled out by a lender, brokers across the country analyze and evaluate its value for their clients.

Additional Options through a Broker

Specifically, the options provided by a broker, as opposed to a bank, include:

    Choice between different lenders
    Negotiation of rates with lenders
    Neutral consultations and assessments

Rising Popularity of Brokers

The recession may be over, but capital is still tight. Bank rates have continued to increase for the past few years. CRBC and TD in particular have both hiked their rates across the board. This has made homeownership very difficult for many Canadians.

The good news is that many brokers can still find the deals among the rising rates.

Lesser-known monolines, or dedicated mortgage lenders, have tried to gain an advantage over the big banks by providing lower rates. It’s difficult for laypeople to find the right monoline for them, but brokers have the skills to find monoclines with both lower rates and appropriate terms.

The public is noticing the better mortgages obtained by brokers. Brokers now account for about one third of new mortgages. Among people who have already gone through the mortgage process with a bank, most choose to refinance using a mortgage broker.

source: northwoodmortgage.com

Which Province Has the Lowest Mortgage Rates in Canada?

However if you go a further east, and you can secure a five-year fixed mortgage with only 2.84% interest, if you’re purchasing in British Columbia.

Alberta, Saskatchewan, and Manitoba share the same rate as Ontario, while Quebec and all of the Maritime Provinces come in within two-hundredths under 3%.

So why is this the case? It can seem slightly confusing that there is so much variation across provinces even though 5-year fixed mortgage rates are driven by 5-year government bond yields.

The short answer is that mortgage rates don’t vary as much from province-to-province as they do from lender-to-lender.

Cait Flanders of RateHub has recently offered a little insight on the matter:

“Individual lending institutions set their rates based on what their profit objectives are, how much competition they have, and what their marketing strategy is. We’ve seen how this works on a national level, when one of the big banks (BMO) launches a new low rate before the other big banks, so they can get some press and gain a little more of the market share.”

Since a lot of small lenders and credit unions only exist in certain problems, this can make all the difference. For instance, if one credit union decides to offer a lower interest rate, it’s very likely that all small lenders in that province will be pushed to offer a similar rate.

Meanwhile, if a credit union in British Columbia lowers their rate, there’s no reason for lenders in Ontario to follow suit since they aren’t competing for the same market.

Then of course, we have the issue of supply and demand. Take Toronto or Vancouver for example, both of which are experiencing a big real estate boom. This increases competition levels, and lenders are forced by the market to offer competitive rates if they want to secure business.

On the other hand, in a small town in Nova Scotia where there are very few reliable mortgage brokers, they have more freedom to decide on their own mortgage rates.

When it comes down to it, no matter where you call home, you should always shop around for the best mortgage. Establishments like Northwood Mortgage are always the best bet for the best rates as we keep our prices competitive against both the big and little companies.

Talk to one of our team members today and see the difference Northwood can make!

source: northwoodmortgage.com