BROKER VS. BANK by A. Dowler SEPTEMBER 11 - 17, 2008 When people start thinking about buying a property, they run to their bank, ask a teller what they should do, get passed on to a so–called specialist who reasons why the bank will not lend you the money. What should you really do? Talk with a mortgage broker. A reputable broker will sit with you and figure out the best plan to purchase a property. The broker is paid by the lending institution on completion of a transaction; therefore, the broker is working as hard as possible to get you the best possible package for your purchase. The broker has more than 60 lending institutions vying for their attention to place your mortgage with them. These institutions offer better rates, flexible payment schedules, and open lending practices all in an effort to get your business. The process begins with the broker checking your credit, how much you owe vs. how much you make, down payment, etc. They will also counsel you how to get ready for the purchase. Three months before the purchase, one should have bank records in order, no bounced checks, the deposit filtering into the account, no over–limit credit cards, etc. Staging or preparing your finances for a purchase is just as important as people staging or preparing their home for a sale. The results are better rates and terms. The old saying of ‘those who do not need the money get it’ is true! Most people feel comfortable dealing with their bank since they have a relationship and a history. A mortgage broker, in most cases, is able to procure a better rate from the same lending institution and also give several competing options. How? The system works in a way that provides preferred rates to brokers; they are in a pool of lenders looking for your business, whereas, your bank is just sending it to their head office in Toronto. Let’s say you conduct your finances with Bank A and Bank B gives you a better mortgage rate. You do not have to leave Bank A and move everything over to Bank B, just accept Bank B’s better mortgage plan and they will set up an automatic withdrawal with Bank A. This can save you thousands of dollars over the course of your mortgage. Bank A will still make a ton of money off your deposits and fees and, when your renewal comes up, they may offer you a more competitive offer this time. A mortgage broker will do all the running around for you and present you with the best possible plan in securing the right mortgage. The final decision is up to you. V [DARRIN DEROCHES] Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.