Mortgage Broker Myths Debunked
When buying a home, mortgage brokers can be an invaluable ally in finding the best financing options. Unfortunately, brokers sometimes get a bad rap as pushy salesmen who are trying to make as much money as possible off their clients.
In reality, the vast majority of mortgage brokers are helpful and knowledgeable real estate professionals. Whether it is explaining the difference between LVR and LMI, helping small business owners secure a home loan, or translating the small print, brokers can help buyers successfully navigate the financing process.
The following are four common myths about mortgage brokers that need to be debunked:Myth #1: Mortgage brokers are expensive
It’s a common misconception that mortgage brokers are expensive and charge lots of hidden costs and fees.
Most brokers are paid through commission at closing; this is typically based on a percentage of the total loan amount. While some brokers may charge additional fees, these are communicated to buyers upfront.
Some buyers think working directly with a financial institution will “save” them the commission costs. Which leads to the next myth…Myth #2: Mortgage brokers work for the banks
Mortgage brokers may represent the best loan products from a financial institution, but they do not work directly for any specific bank or lender. This allows them to shop around to multiple different lenders to find their buyers the best terms and rates. When working with a broker, they should:
- Be upfront and transparent with fees and commissions
- Offer competitive options from different lenders
- Have explanations for the loans they recommend
While finding low interest rates for their clients is part of what a mortgage broker does, there is more to a loan than just the interest rate. Working directly with buyers, brokers will help find the best loan that their buyers are most likely to be approved for.
Brokers can also be invaluable in situations with complex finances, such as a buyer who has previously declared bankruptcy, owns a small business, is buying an investment property, and more. Because these loans are often more complex, working with a broker to find the most favorable terms gives buyers the best chance at their loan application being approved – and reaching closing on time.Myth #4: Mortgage brokers have worse rates than the banks
Buyers often think that their neighborhood bank will provide them with the best interest rates. However, this is not always the case. Working with a single bank means buyers are only getting loan options from that financial institution; this can lead to buyers missing out on better loan terms from a different lender. Brokers, however, know the ins and outs of the industry, keep up to date with the latest market trends, and understand the application and approval process for multiple lenders.
by Author, Dec. 14, 2020