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(Oct 2, 2023)

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Mortgage rate holds work by allowing applicants to secure a specific interest rate offered by a lender for a predetermined period of time, anywhere from 30 to 120 days. The process begins when you complete a mortgage application directly with a bank, or a mortgage broker.

Should I inquire directly with a Bank, or a Mortgage Broker for a rate hold?

While you have the option to go directly to a bank or work with a mortgage broker, there are several compelling reasons why choosing the latter can be significantly more beneficial:

Access to Multiple Lenders:

Banks typically represent their own suite of mortgage products, limiting your options to what that specific bank can offer. On the other hand, mortgage brokers have access to a wide network of lenders, including banks, credit unions, and alternative lenders. This means they can shop around on your behalf, helping you find the most competitive rates and terms available in the market.

Efficiency and Reduced Credit Inquiries:

When you approach multiple banks directly for mortgage rate quotes, you’re often required to complete separate applications for each one. Each of these applications triggers a credit inquiry, potentially impacting your credit score. However, when working with a mortgage broker, you only need to complete one application, and the broker can then approach multiple lenders with the same application and credit report. This minimizes the number of credit inquiries, preserving your credit score.

Confidentiality:

When banks individually check your credit score, they can see the names of other lenders who have inquired about you. This knowledge can put you at a disadvantage during negotiations, as banks may adjust their offerings based on the competition. Mortgage brokers, however, protect your confidentiality. When they inquire on your behalf, only the brokerage’s name appears as the inquirer on your credit report, not the specific lenders they are contacting. This ensures a level playing field during rate negotiations.

Credit Score Preservation:

Every credit inquiry has the potential to impact your credit score, albeit usually by a small amount. If your credit score is on the borderline between good and fair, even a single additional credit inquiry can make a difference. By working with a mortgage broker and minimizing the number of credit inquiries, you’re safeguarding your credit score and maximizing your chances of securing the most favorable mortgage terms.

SUMMARY:

While both banks and mortgage brokers can help you secure a mortgage rate hold, the advantages of using a mortgage broker are clear. You gain access to a broader range of lenders, streamline the application process, protect your confidentiality, and, crucially, protect your credit score from unnecessary hits. Ultimately, this approach empowers you to make more informed decisions and potentially save money on your mortgage.