The following is a guest post by Shuey Fogel, a nonprofit professional turned banking specialist. He is currently Director of Nonprofit Services for an Israeli bank. Shuey shares relevant conversations, articles, and experiences on his blog, nonprofitbanker.com.
I bought a house this past September. After speaking to a few friends, I decided to use a broker to help me secure a mortgage instead of dealing with the banks directly.
This is one time when I felt that paying a service commission (mortgage brokers aren’t free), saved me money in the future (as well as, time and lots of headache right now).
The following are the benefits I experienced from using a mortgage broker:
1) Person I Could Trust
Banks are banks; what you see is what you get. And most of the time, you don’t have a choice. No so with brokers. I shopped around until I found a broker I could trust and with whom I could work (not always the same thing). I called for references to check on his track record. Right from the start, I knew I could count on the person that was going to be handling the brunt of the work connected to the mortgage; a much more comfortable alternative to dealing with an anonymous bank clerk.
2) No Language Barrier
I’m a banker. I have also been working in Israel for almost seven years. With this said, I can confidently say that I don’t fully understand the process for securing a mortgage in Israel nor all of the Hebrew phrases used in connection to mortgages. Variable interest vs. Fixed Interest vs. Cost of Living Index? Insurance through the bank or privately? Ishur al chovot ba’alei zechut? Biniyat Atzmit? Questions and phrases that I didn’t know but my broker did.
The broker is a native English speaker (though his company also employs Hebrew and French speakers) and, moreover, the broker’s application form was in English. And when I was signing forms at the bank he was right there next to me, answering any questions I had.
3) Time Saving
I am very busy during the day. My wife is very busy during the day. Heck, we’re both pretty busy even at night. Mortgages are a time consuming ordeal. First, there is the shopping at the different banks to get the best rate. Then there are the multiple trips to the bank to sign various forms. Not to mention the various other documents necessary to secure the mortgage from other parties, such as: lawyers (power of attorney); appraisers (approved written appraisal of the property); permit offices (heter biniyah) etc.
The mortgage broker did the shopping for me. He arranged a time for me and my wife (we went separately) to come to the bank when he was going to be there – no long waits for available clerks. He was in touch with the bank about any missing or outstanding forms. We worked with each other by fax, email and, when necessary, messenger. He would then take with him on his weekly trips to the bank, my forms and questions. I only had to go to the bank twice! He even laid out money when we had to order an appraisal of my house.
4) Better Loan Terms
A broker is handling multiple loans each month and, as such, has more bargaining power than a private individual. Moreover, as he has amassed quite a lot of experience, banks will find it very hard to pull the wool over his eyes.
My broker showed my loan to three different banks to see who would give him the best price. But still he wasn’t done. He then pushed so that could get the terms I needed, both in terms of length of the repayment and one-year grace (I’m renting while I’m building).
N.B. This is not to say that it is impossible for a private individual to procure similar rates and terms as a mortgage broker. I’m just saying I haven’t heard of someone that has.
5) Hand Holding
My broker knew exactly the kind of time constraints I was under and actively worked with me to make sure the application was moving along. He would email me reminders or just call to see if I had any questions.
It was a pleasure having my messages, texts, faxes, and emails answered promptly.
A mortgage broker knows that he doesn’t get paid until the bank releases his client’s mortgage. It is to his benefit to move the process along as expediently as possible – a situation that benefits everyone involved.
Again, this service is not free. Mortgage brokers charge a percentage (varies) of the amount borrowed from the bank (not the purchase price). However, my broker’s service saved me huge amounts of time and hassle (which is also worth money) and was able to procure me a longer term loan that made the monthly payment more feasible. Other friends of mine who did more intensive research, told me that according to their calculations, the lower interest rate obtained by the mortgage broker paid for itself after a year to three years (different friends has different rates) – the remaining years were pure savings!
In short: In addition to cheaper monthly mortgage payments, I still have my sanity and my marriage intact. In my opinion, hiring a mortgage broker is definitely something to consider when buying a home in Israel.
Shuey Fogel is a nonprofit professional turned banking specialist. He is currently Director of Nonprofit Services for an Israeli bank. Shuey shares relevant conversations, articles, and experiences on his blog, nonprofitbanker.com.