August 03, 2014
Mortgage brokers biggest competitors are banks. Simply, mortgage broker cannot offer lower interest rates than banks because mortgage brokers are the middle man looking for commission. They are simply an add on cost. So to weed out the competition, the mortgage broker would encourage you to buy more than you can afford. This ensures the banks will not approve you, thus eliminating the competition. The mortgage broker's advantage is that he can find lender that give high interest rate mortgages where as the banks will not. The broker could justify to you, "House prices always goes up. It is better to buy more and pay the higher interest you will get high appreciation on your more expensive homes." If you believe it, than you would need to use the mortgage broker's services.
Whether the investment wil make larger returns is a risk you would need to analyze without the assistance of the broker! This was what caused the recession in the United States where many Americans were buying more than they could afford. If you are new to the world of real estate, I would only take the lowest interest rate possible. There is a lot of crooks out there and a lot of mistakes you can make.
This very common tactic is used everywhere. Make you work as hard as possible, so you have a vested interest and then sneak in the fees like you were already suppose to know. The mortgage broker will first make sure you can get approved. Ask for the necessary information and then, suddenly out of no where, he will ask for your credit card inside one of the approval documents. He won't tell you any other fees, unless if you already know it. Doing so, slowly gets you committed.
Thankfully, if you have read these articles, you will know all the fees it takes get approved. Unfortunately, I ahve not met a mortgage agent honest enough to tell you all the fees before making you work for it.
Mortgage brokers know that to attract clients, they need to have lower than theory competitor's interest rates. One tactic is to offer lower interest rates that can never be approved. I saw one mortgage broker site giving interest rates as low as 1.1% during a time when the standard is 2.15% and the prime rate is 3%. If you were to try and call this broker up, he'll then tell you that interest is no longer available or you didn't qualify or something to that extent. The purpose of getting you to call, is to get information. Now he, the mortgage broker's knows you are looking and he can then attempt to sell you something.
Posting Mortgage interest rates that cannot be approved is downright lying. I simply would not recommend working with liars.