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Realtors Shouldn't Be Mortgage Brokers
There are two reasons I say this. The first is a conflict of interest.
When your Realtor helps you find a home that you like, they naturally want you to qualify for a mortgage so you can buy the home. They've worked hard and will only be paid once the deal goes through.
Meanwhile, a Mortgage Broker has a duty to present your complete credit information to financial institutions, even if that means your mortgage request will be declined.
This arrangement works fine when the two roles are handled by separate people. However, when your Realtor is your Mortgage Broker, they may be required to work against their own deal going through! On top of that, a rejected mortgage application will cost them two commissions, one as the Realtor and one as the Mortgage Broker.
The conflict of interest here is obvious, and a number of Realtors have spoken out against dual-licensing for precisely this reason.
How does this conflict of interest affect you as a buyer?
Unfortunately, a small number of dual-licensed Realtors have gone so far as to commit mortgage fraud to make sure a deal goes through!
This is extremely risky for you as a buyer, because the bank will immediately pull your mortgage if the fraud is discovered (and it often is). Try arranging a new mortgage when your last one was pulled because of fraud! Most likely, you'll be unable to get a new mortgage, and could lose your home.
Is the risk worth it, especially considering how easy it is to find an independent Mortgage Broker?
Aside from fraud and conflict of interest, there is another reason your Realtor should not be your Mortgage Broker: it's double-dipping.
Unlike an independent Mortgage Broker, who must provide good service if they want to stay in business, a Realtor can simply feed off their home-buying clients, knowing that very few of them will opt out. After all, who would voluntarily make their home-buying experience more complicated?
In fact, licensing companies that advertise to Realtors stress the “easy money” to be made when dual-licensed as a Mortgage Broker. Does this sound like something that's being done in your interest?
The best way to protect yourself as a buyer is to make sure your Mortgage Broker is a separate person from your Realtor. Ask your Realtor for several recommendations, then do your own research and pick one you're comfortable with.
By choosing an independent professional who has no incentive to lower their standards, you'll get the best service and avoid fraud and scams.
Want to know more about dual-licensing or Mortgage Brokers? Just ask me, I'll be happy to help.