Will you accept this rose… er… mortgage?

Finding a Mortgage Professional is like finding a boyfriend (or girlfriend). You have to date a few to find “the one”. Whether you find someone online, or get set up by a mutual friend, you likely won’t commit right away. Maybe, your friend Rachel sets you up with Chandler the Mortgage Specialist, from TD bank on Tuesday and your other friend Monica sets you up with Joey the Mortgage Broker, from Dominion Lending Centres on Thursday. Both are charming, both are promising you the best mortgage and both want to be exclusive with you.

How do you tell them apart? If you thought a Mortgage Specialist and a Mortgage Broker/Agent were one and the same, they are not. They are opponents! And they are fighting for your love! Who will win your heart…er…business???

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A Mortgage Specialist is an employee (of TD bank, for example). If you walk into your local TD branch, and request a Mortgage approval or pre-approval, you will meet your Mortgage Specialist. The Mortgage Specialist will ask you to fill out an application and submit a few financial documents. Once the documents are collected, the Mortgage Specialist submits them to the underwriter. At the end of the process, if you are approved, you will end up with a TD Mortgage.  

If you and your whole family are long-term TD customers with a line of credit, credit cards, chequing and savings accounts, and a variety of other loans, then you may end up with preferential treatment and a favourable mortgage approval.

That’s fair, but what if you and TD are not in a committed relationship where each of you promises to be loyal to the other, in sickness and in health, through good times and through bad times. 

When it comes to mortgages, it doesn’t always pay to be monogamous. It doesn’t pay to be polyamorous either. You can allow three suitors to court you, but no more than three. I’ll get back to this point later.

What if BMO is offering a better rate than TD? What if RBC, CIBC, HSBC, ING, Manulife Bank, PC Financial, Scotiabank, National Bank, Industrial Alliance or Desjardins are offering a better rate?

What if First National, MCAP, Street Capital, Home Trust, Merix Financial, ICICI Bank, CMLS, MonCana Bank, Radius Financial, RMG Mortgages, AGF Trust, B2B Bank or Xceed are offering better rates?

What if you’ve never even heard of these Lenders?

A Mortgage Broker is not an employee of any one particular Lender, but more like a freelancer who works with hundreds of Lenders to find you the best rate. He works for a Brokerage (like Dominion Lending Centres, for example) and (usually) gets paid a commission directly from the Lender only after the deal is closed. A Mortgage Broker will closely evaluate your financial and credit history and advise you on what terms (open, convertible, closed, variable open, variable convertible, variable protected), which options and features (buydown of mortgage rate, assumable mortgages, accelerated payments, extend and blend, portable mortgages and skipping mortgage payments) are best for you. The main point of difference is that a Mortgage Broker/Agent can find you the lowest rate on any particular day, out of hundreds of Lenders.

It’s like going to the airport and buying a ticket directly from the Air Canada booth at whatever price they’re selling for that day, or buying your ticket from a travel agent, or a discount website, on which ever airline will get you there for the best possible deal.

You’re responsible for your own success. When you’re in the market for that perfect mate… er… mortgage, you have to present yourself in the best possible light. In the mortgage world, you are only as good as the documents you submit for approval (your credit report, employment letters, pay stubs, NOAs, downpayment verification).

Based on the quality of these documents, the Lender will classify you as an A, B or C Borrower. 

If your credit score is excellent, your income is verifiable and you have substantial savings for at least 20% (of the purchase price) deposit, then you’re an A Borrower and chances are you’ll get a favorable rate because the Lender will see you as a low risk Borrower.

Let’s say you’re an excellent catch, you don’t have to settle on working with the first Mortgage Professional you meet with. You can go on three mortgage dates, and then settle for the best one. Why limit the number of Mortgage Professionals you meet with? It’s because every time you apply for an approval or pre-approval by a Mortgage Professional, that professional will want to pull your credit report because it is part of the criteria they need to evaluate you and determine the most suitable Lender. If your credit report is pulled repeatedly in a short period of time, the credit score begins to decline. If you are a truly polyamorous Borrower and you simply must go on 5, 10 or more mortgage dates (I don’t judge), then it’s better to download your own credit report from Equifax.ca. Instruct the Mortgage Professionals to use the credit report you provide them with and assert that you do not authorize them to pull it on their own.

I, personally, prefer working with the Mortgage Broker from a Brokerage rather than the Mortgage Specialist from a bank. I can expect a closer relationship with a Mortgage Broker. I know I can call him on his cell phone at 11pm and he will answer. I know that when I need something from him, he doesn’t need to run it by his boss, his boss’ boss and the legal department and every other senior in the office. It also doesn’t take him 4-5 days to deliver. If he doesn’t find me the best deal, then he doesn’t get paid. If he finds a better rate later, he will tell me and revise my approval. His only job is to secure a mortgage for me. He won’t try to upsell, cross sell or promote other products. I know that he always keeps my best interest in mind, and he will fight for my love.

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When you find “the one”, you won’t want to let him go. If you haven’t found the one, keep looking. Even, if you think you found “the one”, but then you meet someone else, and decide that he’s “the NEW one”, it’s ok to dump “the OLD one”. It’s not the nicest thing to do, but hey, you have to do what’s right for you. Just make sure it’s not later than two weeks before your closing date because at that point the Mortgage Professional is sending the Mortgage Instructions to the Lawyers and the closing process is initiated. It’s the equivalent to standing at the alter, and the Officiant has asked you to repeat, “I take thee…”

 

THE PRECEDING COMMENTARY IS THE OPINION OF HANNA MACDONALD AND DOES NOT REPRESENT THE INTERESTS OR OPINIONS OF RIGHT AT HOME REALTY INC., BROKERAGE OR THE TORONTO REAL ESTATE BOARD. THEREFORE, RIGHT AT HOME REALTY AND THE TORONTO REAL ESTATE BOARD WILL NOT BE HELD RESPONSIBLE AND/OR LIABLE FOR ANY OF THE OPINIONS HEREIN.

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