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If I'm refinancing a residential home, and already know exactly which company I will use to obtain a mortgage from (and at which rate), is there any value in working with an independent mortgage broker?

I have seen estimates of ~1% of mortgage amount as cost of engaging a broker. So what do I get for that price other than the no-longer-necessary-process-of-shopping-for-best-mortgage (which I did myself already)?

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    You do not need a mortgage broker. You are very likely to obtain a better rate without one. – Pete B. Mar 5 '18 at 15:48
  • This question needs a country tag, I believe. – Joe Mar 5 '18 at 20:01
  • Note that the ~1% origination fee will likely be added by the bank as well, so you may not be saving much by going directly to the bank (all else being equal). – D Stanley Mar 5 '18 at 20:20
  • @DStanley - is that fee added only when there's no broker (and becomes a broker's fee if there is one)? – user2932 Mar 5 '18 at 21:54
  • @user2932 They are the same. I've only ever heard it called "origination fee" - "broker fee" may be a colloquial term. It's compensation to the bank or broker for the work of setting up the loan. Bottom line - don't expect to save 1% of the loan amount by going directly to the bank. – D Stanley Mar 5 '18 at 21:57
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Depending on the situation, the mortgage broker may still end up getting you a better rate. Last time we re-fixed our mortgages, I spoke to both the broker and our personal banker, and the broker had the better rate.

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    This doesn't answer the question which is "what does the broker do OTHER than get you presumably better rate". – user2932 Mar 5 '18 at 19:56
  • No, it doesn't. But it does answer the question asked, which is "is there any value in working with an independent mortgage broker?" – Rupert Morrish Mar 5 '18 at 20:03
  • the question asked was "... other than the no-longer-necessary-process-of-shopping-for-best-mortgage (which I did myself already)". – user2932 Mar 5 '18 at 21:52
  • You don't have access to the same rates the broker does. Until you ask him you don't know if he's unnecessary or not. – Rupert Morrish Mar 5 '18 at 22:03
  • If you can provide reference for that assertion (not anecdotal one just from your specific bank) I'd be happy to accept the answer. – user2932 Mar 5 '18 at 22:20
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When I refinanced my condo last year my bank could not match the rate and fees that my broker offered so I went with the broker. Coincidentally, 2 months after I closed, my mortgage was transferred to my bank! (This was a pleasant surprise to me.) This is obviously anecdotal; I'm sure some people have the exact opposite happen where the broker charges more.

The main benefits of a broker are:

  1. They do comparison shopping for you.
  2. In my opinion the brokers generally seem to have more experienced and knowledgeable loan officers. They work with many different banks and processes every day so they really know the tricks of the trade.
  3. Brokers are not a true middle-man scenario which would naturally incur higher fees. For example, loan officer commissions don't need to be paid back to the issuing bank. The broker's LO is instead acting like another sales arm for the bank, but with less overhead from the bank's point of view. Therefore high volume brokers may be willing to turn a smaller profit and could actually end up being cheaper, like in my case.
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If you know what mortgage product you want, and you know who you want it from, then there's very little point in engaging a broker. They will end up as a pointless intermediary between you and the mortgage company.

If the mortgage company wants to ask a question (for instance to check your ability to pay), then they would have to ask the broker, the broker would ask you, you tell the broker the answer, then the broker would tell them. If there's a follow on (for instance if they want some documentary evidence of something), then the whole process goes round again.

And for all that getting in the way of communication, the broker will expect a fee from you, or a commission from the bank (which will be factored into the mortgage cost).

  • If you can provide specific evidence/resource to back up negative answer, i'll accept – user2932 Mar 5 '18 at 21:53

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