Why Work with Mortgage Brokers?
During one of our company meetings, our new intern asked why anyone works with mortgage brokers. Even though I’ve been in the business for years, it never occurred to me to ask something as fundamental as, ‘Why are we in this business?’ At a time when lenders make themselves more available online, why do people, indeed, work with mortgage brokers?
While property owners have their own networks and relationships with lenders, mortgage brokers are attuned to the changing landscape of the lending industry. Lenders typically have a niche on what asset types and deal sizes they focus on, and are constantly competing for properties to lend on. That may mean offering promotional rates or favorable terms depending on the lender’s appetite for risk, the collateral asset, and the borrower’s financial history. Most property owners have, at some point, dealt with a lender for their mortgages, but that doesn’t necessarily mean they are getting the best deal at the right time. It is a mortgage broker’s job to scout for the best deal available in the market considering your objectives as borrowers.
What exactly do borrowers look at when considering taking out a mortgage? I often hear rates, terms and LTV thrown around as if we can compare quotes simply based on these metrics. Rates tend to go slightly higher the longer the term is so it is important to compare rates in conjunction with the length of the term. It is also important to note renewal periods as this can save you from paying closing costs at the end of a term, and may or may not reset your amortization schedule. Some borrowers are sensitive to LTV, and while this is a good metric to determine how much you can borrow, it is important to note that banks underwrite properties differently so appraisal values may differ. With that said, mortgage brokers should be able to advise you how much you can take out in loan proceeds more accurately. A bank offering lower LTV may have a higher appraisal value than another bank offering higher LTV.
Every borrower has different financial objectives. While it may seem like one mortgage product sounds appealing, it is best to consult with a mortgage broker to explore multiple options.
Author: Irene Uy
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