I will admit that there was a time where this post would have taken a whole different tone. I have had some extremely bad experiences with Mortgages Brokers in the past. I have since learned that your Mortgage Broker is probably THE MOST IMPORTANT MEMBER of your power team. The industry has also changed.
Just like Real Estate agents, you need a GOOD mortgage broker. Try and find one that has at least 10 years bank mortgage experience, with at least 2 different banks, is also a real estate investor, and will be honest with you, even if the news isn’t what you want to hear. They should also be able to come up with ways to help you overcome any credit obstacles you may have. They are also a source for creative financing ideas as well. (At least mine is.)
The Broker I use is all of these things. I have learned more about Real Estate in general, and real estate financing in particular, from her, than anyone else. She has salvaged deals for my friends, that other Brokers had muddied up, on more than one occasion. She has even referred us to other Brokers, in other areas of the country when we did projects out there. All of her referrals have been top notch as well.
What makes a good mortgage broker so much better than you going from bank to bank? First off, I have found very few people (except me) who actually like going from bank to bank, baring their financial soul to a stranger. Also, each time you ask for credit, it lowers your credit score. Visit 3 banks and your credit score just took 3 hits. Institutional mortgage managers can also only access funds from that institution. Just so that you know, there are a large number of companies that do mortgages, that are not banks. Many of them are listed on the stock exchange. Banks do/will not represent private or unconventional lenders either.
A Mortgage broker is quite different. You only need to see one person. The broker will collect all the necessary financial information required, talk to you about your needs, then they package your needs and send them off to several different lenders. This saves your credit score, because the broker only checks once and sends the information along as part of the package. They do all the “shopping” for you. We all know that banks have pretty tight rules about who and what they can lend for. If you don’t fit the criteria you get rejected. Because mortgage brokers have access to many different types of lenders with varying requirements, they are able to find the right fit for your mortgage at the best possible rate.
Due to the not well thought out rules around mortgages in Canada, (you would think the Bank of Canada and CMHC would understand the Real Estate market better) many real estate investors will not fit the bank rules. Mortgage brokers represent private money as well as institutional money. (Unconventional vs Conventional money) Many private lenders have a more realistic view of money.
Be warned. Private money comes at a much higher cost than conventional money. For a home owner, that is very important. To a real estate investor, it is more of a “Cost of doing business.” You can find private money on the internet. 4,550,000 sites in .6 seconds. So why use a Mortgage broker?
If I am getting a $500,000.00 mortgage that is costing me Fees and 10% interest, I want to be sure of the people I am dealing with. A good reputable mortgage broker, only deals with good reputable private lenders. Mortgage Brokers are your protector.
Your mortgage broker should also be your FIRST STOP BEFORE you start looking at property. By doing this you have a realistic view of what you can do for financing so, that you can present a strong offer when you want to buy. There is nothing worse than finding the property of your dreams, at a great price, then finding out you can’t get financing. NEVER go looking for a property without arranging your finances FIRST!!!
That is why your MORTGAGE BROKER is the number 1 person on your power team. In order to not upset other brokers, if you want to know who I use, just contact me and I will send you the information.