Mortgage brokers help connect borrowers with lenders that offer competitive home loan rates and terms at reasonable fees, for which they charge a fee for their services. Before engaging the services of a broker, however, it’s essential that you fully understand what they do (and don’t do!) on your behalf.
Mortgage brokers serve as intermediaries between borrowers and lenders, providing mortgage loans from multiple banks and providers and acting as liaisons throughout the mortgage process to assist both with paperwork and technical aspects of loans. Brokers are among the primary sellers of such products on most developed mortgage markets.
Mortgage brokers play an essential role in matching borrowers to loans that best suit their financial profiles and goals. In addition, they collect and review vital financial documents like employment documentation, pay stubs, tax returns and bank statements before sending it off for underwriting and approval from a mortgage lender.
Mortgage brokers can often help borrowers save time and effort by doing the legwork for them and negotiating loan terms on their behalf, however it’s still wise for borrowers to conduct research themselves in order to ensure they get the best rates and terms possible.
Some mortgage brokers could have conflicting interests that may influence their advice, for instance by steering you toward lenders with higher fees to them – which in turn increases borrowing costs.
Further, some lenders do not work with mortgage brokers; thus if you use one instead of working directly with another lender directly. Though rare, lenders may exclude borrowers due to the use of mortgage brokers from loan programs altogether.
Canadian mortgage brokers are subject to regulation by provincial governments, who require them to obtain a license before engaging in this profession. Some provinces also mandate membership in professional associations that monitor brokers for ethical conduct as well as refer complaints to appropriate authorities. Finally, federal laws also govern mortgage broker activities and regulation.
