When you’re entering the world of real estate and buying and selling property, you want to have a great team of professionals behind you who put your best interests first. At the heart of this team, and where your mortgage journey should begin, is the mortgage broker. But what does a mortage broker broker do, and how does working with one benefit you?
Mortgage broker
There are a number of professionals out there whose job is to assist you in picking a mortgage product that best suits your needs. You need them – you can’t get a mortgage without one. A mortgage broker is a licensed professional who compares mortgages from a variety of lenders to find the best option for their clients. A mortgage broker is a kind of middle man between you and your lender. The bank versus broker debate has gone on for ages, but the biggest difference really lies in the fact that a mortgage broker has relationships with multiple lenders, from conventional lenders like banks to alternative lenders, and that they often have better access a number of lenders that you, as a member of the public, don’t. Smaller lenders, who don’t have the same overhead costs as big banks, often have cheaper rates and fewer fees. Mortgage brokers are also better able to arrange mortgages for those homebuyers who have extenuating circumstances that make a bank loan unrealistic.
When they receive a mortgage application, a mortgage broker will shop it around to their lenders to see which lender will give you the best interest rates, conditions, and terms. Mortgage brokers will come to you, so it’s a bit easier to fit meetings into your schedule. Brokers either work solo or within a larger broker network. You generally won’t be expected to pay a broker; they get paid a commission by the lenders, depending on the mortgage product that you end up choosing so there is no direct cost to the mortgagor, their clients. It’s important to do your due diligence when looking for a mortgage broker because you want to make sure that you get the mortgage product that’s best for you and not necessarily the product that puts the most money in your broker’s pocket. A good mortgage broker will not only get you the best interest rate, but they will also succeed in explaining a lot of the fine print and confusing language that exists in almost all mortgage paperwork.
Mortgage brokers aren’t the same thing as mortgage specialists. A mortgage specialist works at a lending institution like a bank or credit union. Like mortgage brokers, they provide you with expertise, advice, and guidance – but only when it comes to choosing between the mortgage products that are on offer at that particular bank. A mortgage specialist for RBC, for example, won’t be able to help you when it comes to comparing one of their mortgage products to that of another lender, because they aren’t well-versed in anyone else’s mortgage products apart from those offered by their specific bank. Even if they did know of other products, they wouldn’t tell you about them because their job is to get you the best product at their particular institution. Depending on the company, these roles have various titles: mortgage specialist, mortgage advisor, and mortgage representative, to name a few. They can be in-house or out-of-house, commissioned, salaried, a combination of the two, or paid hourly.
Finding a mortgage broker can seem overwhelming, but if you don’t have any recommendation from friends and/or family, you can start your search here and get some tips for choosing one.
A mortgage broker is also able to help you find other professionals to help you process your real estate transaction, such as real estate professionals and lawyers.
Real estate professionals
Once you get your mortgage squared away, you’ll probably want to start looking for homes, and that’s where your real estate professionals come in. Any good real estate agent will tell you to go get your mortgage preapproval first before they start taking you to see properties. After all, you can’t shop for a house if you don’t know how much money you’ll be able to borrow!
A real estate salesperson, more commonly known as a real estate agent, is someone who is licensed to buy and sell real estate. A real estate broker is someone who has received additional training and who generally has more years of experience. A real estate broker can either operate independently or run their own real estate brokerage, with agents operating underneath them. A REALTOR® is a licensed real estate professional who is a member of the Canadian Real Estate Association (CREA), which holds its members to a Code of Ethics that governs the standards of real estate practice. A REALTOR® is always a real estate agent, but a real estate agent isn’t always a REALTOR®. Some agents specialize in particular types of property, such as condos, recreational properties, or investment properties.
You don’t have to use a real estate agent to look at homes (or to buy one, for that matter) but if you’re new to the game, they can streamline the process, and you can benefit from their experience. A real estate agent can help you get access to listings that aren’t publicly available yet, either by knowing the listing agent or coming across a “pocket listing,” a listing that’s being marketed but that isn’t on the multiple listing service (MLS). They are more likely to be able to arrange private viewings as opposed to just going to open houses and show you some properties that you may not have considered.
Perhaps most importantly, a realtor will help you determine the fair market value for a property and are instrumental when drawing up the Offer to Purchase, also called an Agreement of Purchase and Sale. They will discuss with you the price and conditions that seem fair to include or to leave out of the offer, and will help you in the negotiations process if your offer isn’t accepted outright.
Realtors work on commission and they are paid by the sellers, not the buyers.
Real estate lawyer
Last but not least is the lawyer. A real estate broker will probably some knowledge of real estate law, but it pales in comparison to an attorney. It is not advisable to buy a home or other property without a lawyer to oversee the purchasing agreement and all associated documents to ensure that all of a buyer’s or seller’s legal rights and protections are adhered to. Although the lawyer is last mentioned in this list, having a lawyer waiting in the wings early on in the process can help alleviate any other legal issues that may arise.
Similar to how getting a mortgage shouldn’t only about the lowest-possible interest rate, hiring a lawyer shouldn’t only be about the lowest possible fees. The last thing that a buyer – or a seller – wants to do is shell out more money, but you want to make sure to get a reputable lawyer who doesn’t cut corners or costs when it comes to getting the job done.
Once you arm yourself with an experienced crew of mortgage and real estate professionals, you can move forward with your property purchase knowing that you’ve gotten the best advice, guidance, and protection.
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