What to Ask your Mortgage Broker
Once you’ve narrowed the list down of potential brokers, don’t be afraid to ask questions. The more you know about your mortgage broker and the earlier you know this information, the better. Here’s a list of questions you should ask:
How long have you been in business?
Although there’s nothing wrong with working with a broker who’s new to the business, experience is key when it comes to dealing with complicated mortgages. It’s always a better for you if the broker has a few years of experience under their belt. Also, ask about the number of mortgages they close in a typical year. Anything under 1-2 a month might indicate they are new to the business.
What kind of education or licensing do you have?
All mortgage brokers in Canada require a license in order to practice. Some are members of associations, while others work from private practices. You should verify that your mortgage broker is licensed by going to the Canadian Association of Accredited Mortgage Professionals website.
On what do you base your recommendations?
Remember that although the mortgage broker is working for you, they are paid by the lender. When they deliver good, credit-worthy borrowers, like you, they get paid handsomely for it. Don’t be afraid to ask them to disclose their fees and commissions up front. You want to be sure that they’re making recommendations for the right reasons.
Are there any special conditions that apply to this deal?
A super low mortgage rate may be attached to a ‘no-frills’ product, which sometimes do not offer or have very limited prepayment options. This type of mortgage product can typically save you money in the short term, but may cost you substantially more in the long run. Be aware of hidden costs or undesirable conditions attached to no-frills mortgages.
What fees and/or costs are associated with the interest rate you’ve quoted me?
Sometimes mortgage brokers will quote really low rates just to get you in the door. Once they’ve got you there, they can tack on all kinds of extra fees. Some of these fees can include a credit report charge, an appraisal, title insurance, deed-recording and overnight deliveries.
Can I please see the lender’s letter of commitment?
If your mortgage broker has promised you a specific rate, ask for a letter from the lender proving that the discussed rate is indeed locked in.
What is your area of specialty?
Even though a broker may state that they are “full service,” they quite often facilitate more loans of one type than another. Ask what percentage of their total volume comes from residential loans. If you are interested in a commercial property, make sure you ask your broker if they have closed commercial loans before.
Are you affiliated with any mortgage associations?
Membership to some mortgage associations can sometimes be indicative of the broker’s oath to offer the best loan options available, regardless of commission. Membership to some associations requires additional education and examinations. Also, those mortgage brokers who do belong to professional organizations may also be listed in a directory. This gives you the opportunity to view any customer complaints, should they exist.
Can you provide me with references?
Even though your mortgage broker will most likely come armed with testimonials from past clients, there is no way of determining how old those testimonials are. Instead ask them for names of recent customers or Realtors with whom they’ve worked with.
How often will we be in contact?
Although this might seem like an unimportant question, it could be the difference between a painful experience and a smooth transaction.
The combination of thorough research and proper inquiry should help you narrow down your pool of potential mortgage brokers. Trust your instinct and only make your selection if you are completely comfortable.
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