well they are different brokers have many different programs to chose form where a local bank will not. there are also direct lending sources out there with many options as well now as far as getting ripped off they both have about the same charges and they both tend to charge yield spreadjust understand to get a good faith estimate form all parties before signing anything pick the best rate and terms do not get into a adjustable rate now its too risky you should look for the best rate now and also look at the fees origination fee broker fee and the other lender fees below thatmost people are paying 4.5% in lender fees on average also check the APR on the truth in lending form if this is considerably higher they have charged you yield spread! meaning they raised the rate you pay to make money from the bank very common practice.just 1% higher rate on 200k loan is 60k in added interest you will pay and on most mortgages it added to the front of the mortgage you've heard the saying that mostof your payment for the first 10 years is interest! check out www.directlendingplanet.com they do not charge rebate to borrowers
I've been in the mortgage banking industry for the past 10years. I'm not sure about Canada but real estate is going down here in the U.S. If you are renting right now you will come out ahead in the next couple years as everyone Else's' home depreciates by 10-25%. The bank I work for offers "retail" and "wholesale/correspondent" programs. I work on the wholesale side and deal exclusively with brokers/bankers (more on the banker part later). I never deal with borrowers directly. A borrower fills out an app with a "broker" who shops your loan against various programs/rates/guidelines at different banks to find you the best deal. They contact me and I tell them what I can offer. The broker relays that info to you. If you go directly to a bank then your choices are usually limited only to the products the specific bank offers. They're not going to tell you such and such bank has .50% lower rate and half the fees. A broker will send your app to several banks to shop for the best deal. They charge origination and other fees in conjuction with your loan. A mortgage banker sometimes acts like a broker as well. I give clients credit lines to "bank" their own loans. So say you go to ABC Mortgage loans in Ontario for a loan . They offer you a certain product which is actually my banks product in disguise. Once you sign the loan for "ABC mortgage" it's immediately sold to our bank. So although the banker is not a "broker" per se, he still shops his loan depending on who he plans to sell it to. As far as fees go, bankers can hide a lot of things, at least here in the U.S. due to reporting laws. Brokers have to disclose everything. That's how some places advertise "no cost" loans. A broker on the other hand must disclose everything. If I offer him a wholesale rate of "6.5%" he can tell you it's "7%". For the extra .50% we'll pay him a premium on the loan (additional money to him). That is disclosed on your paperwork when you sign.
A broker charges points aka % of loan to find you the best deal. The bank also charges points but not as many. HOWEVER...to get the best possible loan...a broker will know who has the best rates and terms. IF you choose to go to a broker, ask everyone you know who they used! Check them out ask them for referrences!IF you go the bank route you may not get the best loan out there but it will be with someone you trust!
As the name states Mortgage broker, they are a middle man and charge you tons of fees. They do not have any money they just sell the paper work to lenders. A Bank lends you money. The problem with banks it may take longer to get a loan because they are in no rush. Where a Mtg company does not make any money until the loan closes. Your best bet for fees and rates is a Credit Union. Watch out for Mtg Companies, there are good ones but some are pirates
A mortgage broker works with several lenders to try to get a loan set up. But here's something that I heard recently, this applies to the US (I don't know about Canadian laws). A mortgage broker is under no obligation to get you the cheapest loan / interest rate. They may present you with a loan you can afford, but they may actually have had better deals available. They're going to recommend the loan that is better for them (higher commission, etc.)
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I've always used a Mortgage Broker, and she has consistently come through with mortgage rates well below the posted rates. The broker basically shops around at all the lenders/banks to find the best rate as possible.
The advantage of a mortgage broker is they deal with many lenders, and are knowledgeable about a broad range of lending programs. So the mortgage broker can probably find you a loan with a better rate and that is structured better for you.If you go to the bank, they will only offer the lone programs they do.There are also many loan programs - and a number of government programs that give special terms to first time home buyers, that allow you to purchase with a lower down payment.Either the bank or the mortgage broker can prequalify you.
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