TO ASK BEFORE SELECTING A BROKER?
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We love a client who comes to a meeting with a notepad full of questions. It means that they’re considering options and really taking the reins in the process of buying their own home.
But what questions should you be asking? I’m glad you asked. Here’s just five ideas for what to ask brokers while you’re building your team.
While length of time as a licensed broker isn’t a deal breaker – like any other occupation there are some rookie brokers who shine and a few old-timers who get lazy — but in general, you want an experienced professional in your corner.
With more time on the job a broker not only makes more contacts, but also learns the answers to a wider range of questions and has solutions to even the most obscure problems.
With our team of licensed mortgage professionals, Canadian Mortgage Professionals Inc. offers over 55 years of combined experience in collecting answers and providing solutions.
Some firms will have an agent speak with you for a few minutes, then scooch you down the line to a series of interns and underlings, reappearing to collect your signatures on contract day. We suggest it’s better to have one person to speak with through the entire process — call us old-fashioned, but we believe you’ll be more comfortable asking the tough questions (and hearing the answers!) if you know the person handling your file.
Dependent mortgage brokers are essentially sales agents, pointing a vast majority of their clients to a single lender for preferential commissions. Because these people are tied contractually to a single lender — usually one of the big national banks — they have a limited number of products and services available to them. They are frankly not acting in your best interest. An independent local mortgage broker like Canadian Mortgage Professionals, on the other hand, is not required to use any one lender, and can therefore shop around more easily for the best rates and policies for your situation.
Quality brokers continually examine current economic conditions, research historical data and read up on various trains of thought for future markets. They look at relevant events on a variety of levels — neighbourhood trends, municipal zoning, regional plans, national policies, and international issues as well. No one has a crystal ball, but we don’t need one. The best product a broker can offer is accurate information. Their best service? Sound, honest advice. If you’re not getting these two things, but hear a lot of sales pitch instead, perhaps you should interview a few more brokers.
We’ve talked about prime rates, fixed rates, and variable rates throughout our site so you probably have a pretty good idea of what these things are. Still though, there’s no harm in summarizing here.
The Bank of Canada has something called a bank rate, which determines how much lenders pay to borrow money, the lenders, in turn, set a prime rate. Most of the lender’s credit products use this prime rate to determine all of their clients’ interest rates. Large companies, for example, might borrow millions from a bank for prime + 1%, while personal car loans or consolidation loans might be considerably higher, like prime + 8%.
If you have a fixed rate mortgage, a change in the prime rate won’t affect your payments until the end of your term. If you’re in a variable rate mortgage, a 0.25% rise in the prime rate will spur a similarly higher interest rate in your mortgage.
Basically, you should ask as many questions as you can before you sign your name to any legal document, especially one involving hundreds of thousands of dollars and years of payments.