When we meet someone new, inevitable the “What do you do?” question comes up. In my circle of friends everyone knows what I do and so I start assuming that EVERYONE  knows what a Mortgage Broker is.  Apparently I am mistaken (a rare occurrence!).

The other day it was apparent from our conversation that a new acquaintance thought I worked for a bank.  Well, as you can guess there was NO WAY I was going to let that pass without correction, so it was back to the basics!

What Does a Mortgage Broker Do?

Mortgage brokers are experts at every aspect of home purchasing. They constantly search out lenders with the lowest interest rates and best overall mortgage package for buyers. Mortgage brokers are current on all laws and regulations in the provinces where they sell property.

Especially first-time home buyers are wise to use a mortgage broker for their home purchase. Juggling and keeping up with appraisers, lenders, lawyers and real estate agents can be confusing and time-consuming. Mortgage brokers serve as the “middle-man” or as “information central” for your real estate transaction.

There are many incentive programs that most people are simply not aware of. Your mortgage broker keeps on top of what is available and what you need in order to qualify. They can save you time and money by helping you tap into these programs.

Mortgage Brokers are licensed and regulated in BC by FICOM (Financial Institutions Commissions) and keep current on their mortgage education and ethics via continuing studies courses led by their governing bodies. Mortgage brokers in Canada can and should be Accredited Mortgage Professionals with the AMP designation offered by CAAMP (Canadian Association of Accredited Mortgage Brokers). Be sure to ask your mortgage professional if they are licensed by FICOM and are AMP certified.

All Averbach Mortgage professionals are professionally certified.

Won’t it Cost Me More to Use a Mortgage Broker?

Mortgage brokers are paid in one of two ways. Most commonly, they are paid a commission by the lending institution that finances your mortgage. In the unlikely event that a mortgage is placed at a lender that does not pay a commission to the broker for whatever reason, the broker would then assess a fee to the client. This is very rare and typically only occurs if one of these three possibilities occurs: 1) a client has very poor credit. 2) if it is a second mortgage or  3) it is a commercial mortgage. Another rare case is with construction financing. At Averbach Mortgages, typically 99% of our business is from “triple A credit” clients that are professionals with good, provable income.

Mortgage brokers are paid by the bank or lending institution so it is in their best interest to find you the best financing package for your situation. If they don’t do a good job for you, they know you won’t use them again, and you’ll tell all your friends about it!

What’s the Catch?

There IS no catch! Your mortgage broker works in your best interest … they make sure you get the best rate available to you. In fact you might wonder what the catch is when you deal with your bank. They often do not offer their best customers their best rates. Be sure that you do not assume that your bank will give you the best rate … find out if there are better rates and products available to you before you sign!

What’s the Bottom Line?

> Each home purchaser needs to decide what will work best in their situation. One important consideration for home buyers: mortgage brokers don’t get paid until your loan closes. That means they have an incentive to make sure the home buying process goes as smoothly as possible for you and closes in the time frame that works for you.

Home Equity Line of Credit (HELOC) – A Great Way to Consolidate Your Debts

Have you paid off all your holiday bills yet? It is mid-March and many people still haven’t paid off the credit card bills from December and every month their credit card balance gets higher and higher. One of the reasons is because credit card  interest rates are sky high contributing to the ever increasing debt balance.

There is a sensible, affordable option to staying buried under those credit card payments. This year, consider taking charge of borrowing costs by paying off higher-interest credit card debt with funds secured through mortgage financing.

That’s right, if you own a home and have accumulated some equity, you may be able to pay off those credit cards using the equity in your home. A common mortgage option for consumers which offers flexibility is a Home Equity Line of Credit (HELOC) which allows you withdraw funds as needed for a set period. The real benefit is that you can put a HELOC in place for a one-time cost. You can continue to borrow against it and pay off the line of credit many times over. The really good news: you never have to requalify!

Not only can you use the line of credit to pay off your credit cards, you can use the money for anything else you want. Use the money to pay for home improvements, to pay off a car loan, college loan or other higher-interest debt. Your HELOC payments fluctuate depending on current interest rates and the outstanding balance on your line of credit throughout the month so it is important to keep an eye on your balance.

Another great reason to acquire a HELOC is that you only withdraw the money you need. The extra cash can be used for an emergency fund in case of unexpected expenses. You only withdraw what you need and only pay (relatively lower) interest payments on what you withdraw.

Mortgage refinancing also offers a plan to reduce your debt – after the agreed upon amortization period, your balance is zero. With HELOCs, after the set draw period (number of months or years) there may be an amortization period during which any outstanding amount is repaid. In contrast, with revolving credit such as credit cards you may be paying a lot in interest without ever reducing the principal.

You may be surprised to learn how much you can save with a debt consolidation strategy. Averbach mortgage professionals can offer expert advice on smart ways to manage your debt. Contact us today to access your options!  (links here).

If you are one of the thousands of Canadians who are facing a layoff or worse, get your HELOC into place while you are still employed.

Any questions?  Give us a call or send us a note!