Mortgage Brokers:
Get one working
for you!
Of all those reality shows
on TV lately, have you noticed how
many participants are mortgage brokers?
Sarah of Joe Millionaire fame was
an assistant to a mortgage broker
and Bachelor Bob was a mortgage
broker. That's because in
the U.S. there is a large number
of mortgage brokers and using a
mortgage broker is commonplace.
The U.S. consumer rarely goes directly
to a bank to get a mortgage.
In the U.S. in 1992, 25% of the
mortgage were processed through
mortgage brokers. By the year 2000,
that statistic had risen to approximately
70%. The Canadian mortgage market
seems to be heading in the same
direction. At the end of 2001, mortgage
brokers had 25% of the market share
in Canadian mortgage origination.
A recent Canada Mortgage & Housing
Corporation (CMHC) study indicates
that by 2005, mortgage brokers will
have 50% market share in mortgage
originations.
What does a mortgage broker do?
A mortgage broker will work with
you to arrange financing that best
suits your needs. This usually doesn't
cost you any fees, since the broker
is paid a commission by the lender
for placing mortgages with them.
A brokerage fee usually only applies
if the mortgage application doesn't
fit standard qualifications and
the lender, willing to grant the
mortgage, is a tier-two lender in
the business of higher risk lending.
The brokers of today have access
to 30+ lenders, including most of
the major financial institutions
in Canada. Simply put, more lenders
means more competition for your
mortgage. Using brokers is also
a very efficient way for lenders
to add to their mortgage portfolio.
The lender only pays a commission
to the broker when a mortgage funds.
Lenders eliminate the bricks and
mortar costs of bank branches and
all other costs associated with
originating mortgages, in branches.
More competition and lower costs
add up to mortgages with better
rates and terms to suit your needs.
The mortgage industry in Canada
is changing (for the better) and
the mortgage brokers are the catalyst
for this change. As the consumer
becomes more aware of the value
proposition of what a mortgage broker
brings to the table, many more of
you will start using brokers and
recommending brokers to your friends
and relatives. Who knows, a mortgage
broker could be your next "Canadian
Idol"!
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