Understanding Representations: Is your Broker Speaking on your behalf?

The quick answer to this question is a no. Although upfront, the broker could act as a bridge between you and the lender, in reality, s/he is looking after his/her own sake. In other words, the broker will only spruce up the image of the lender or borrower who pays the right price.

While your broker scouts “on your behalf” theoretically, in reality, s/he can’t guarantee you the best deals in the market. What the broker can give is a wholesale price tag. You probably won’t do well as a borrower flying solo in the open market because you don’t have the benefits of a broker who can bring in 10 to 20 borrowers to a single lender.

The best thing you can do is look for a good broker that can offer competitive rates. You can ask for referrals from friends or relatives, so you can more or less catch a glimpse of the broker’s capabilities as a professional.

Don’t entrust your life to any single broker or bank though. The best technique of getting good mortgage deals is still research. Conduct your own research, so when you deal with a broker, s/he knows that s/he’s dealing with someone who’s well educated about the real estate business.

A word of warning: real estate people can smell a food from miles away. You wouldn’t want them to take advantage of you just because you were too lazy to watch your own back.

Should you Seal the Deal with the Bank or a Mortgage Broker?

When you’re considering a mortgage, there’s no one clear answer on who seals the better deal for you: a bank or a broker. On the plus side, a mortgage deal with a bank keeps you in direct, personal communication with bank employees. On the one hand, you have the advantage of having the bank employer sift through numerous loans within that specific banking institution to find the right loan for your lifestyle. On the other hand, your choices are limited only to what the bank has to offer. Other banks might have lower rates, but you won’t be able to know about these unless you do the scouting yourself. A mortgage broker is a middle party between the lender and the borrower. Ideally, a mortgage broker gets service fees from the lender for bringing a borrower his/her way. A broker may also ask for fees from the borrower because s/he scouts for the lowest interest rates available in the market.

You need to warn your mortgage broker to limit his/her choices of lenders to local banks. The processing period of online, overseas banks are generally longer because they don’t really have a full understanding of the properties needs. In other words, unless all of the lender’s questions have been settled, you won’t be able to close the deal.