Empowered Home Buying: 5 Essential Questions for Your Mortgage Broker

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Empowered Home Buying: 5 Essential Questions for Your Mortgage Broker

When it comes to buying a home, there are many decisions to be made. Should you buy a fixer-upper or a move-in-ready home? Is it best to buy a condo in the city or a detached home in the suburbs – or something in between? How many bedrooms is best for life right now – and in the near future?

One decision, empowered home buying, is fairly straightforward. And that is the decision to work with a mortgage broker.

What does a Mortgage Broker do?

professional mortgage broker can help simplify the home buying process from start to finish and save you money as they find the right mortgage for your needs. Because they work with mortgages every day, they can answer all your questions and provide expert advice on the type of mortgage that’s best for you. And since they work with a variety of lenders, they can shop around and negotiate the best possible rate for your mortgage. It’s no wonder that approximately 40% of Canadian homeowners use a mortgage broker!

Whether you’re starting a new relationship with a broker or you have worked with one before, there are some important questions to ask as you begin to look for a home and evaluate your mortgage options.

Here are five questions to ask your broker before you buy your next home.

1. How much will it cost to buy a home?

Understanding all the costs involved in purchasing a home can feel overwhelming, and it’s difficult to know exactly what your total expenses will be. Asking your mortgage broker the right questions can provide you with financial clarity as you begin the homebuying process. For example, you can ask:

  • What will my down payment need to be for the homes I am looking at?
  • What will my monthly mortgage payments be?
  • How much will the closing costs add up to?
  • Are there any other fees or expenses I should be aware of and budget for?

Your mortgage broker will have all the insights you need to answer your questions and provide you with the peace of mind you’re looking for.

2. What is the best mortgage type for me?

There are a number of mortgage options available, each with its own benefits. But what type is right for you? When you consider the various types of rates (fixed rate or adjustable rate), the terms available, and other features available, it can be tough to narrow down the best mortgage type for you. Your broker can offer insights into the various types of mortgages and determine what aligns best with your financial situation and homeownership goals.

Remember, mortgage brokers are here to find the perfect type of mortgage that’s just right for you.

3. How does the mortgage approval process work?

Getting approved for a mortgage can sometimes be a stressful experience. How much will you qualify for? Will you get approved for the home you plan to buy? Your mortgage broker can relieve your anxiety by providing you with all the information you need about the approval process, including:

  • How much mortgage do you qualify for – and what factors affect your approval
  • The documentation you’ll need to share with lenders
  • The steps involved in securing and closing your mortgage
  • The timing of each stage of the approval process.

4. What is your negotiation strategy?

One important benefit of working with a mortgage broker is their capacity to find you the best mortgage to suit your needs.

So, asking them about how they negotiate on your behalf can give you insight into the mortgage type, interest rate and potential savings you might enjoy as a result of your relationship. Consider asking your broker:

  • What is considered a good interest rate in today’s environment?
  • What factors beyond rate do you feel are important in a mortgage?
  • What are the features of the mortgage that will be available – such as prepayment privileges?

5. Will there be any restrictions on the mortgage?

Is it your goal to be mortgage-free as soon as possible? Is there a chance your job may move you out of the country in the near future? Do you anticipate wanting to leverage the equity in your home to pay for renovations in the short term? As all mortgages are structured differently, it is important to understand the specific terms of the mortgage you’re signing up for, particularly regarding prepayments and refinancing.

Ask your mortgage broker:

  • Will there be any prepayment penalties if I need to break my mortgage early? If so, what are they, and how are they calculated?
  • Will I have the opportunity to make lump sum payments to this mortgage so I can pay it down faster?
  • Can I increase the amount of my payment during my mortgage term?
  • Are there any restrictions around refinancing this mortgage?
  • Will I have an opportunity to access the equity I build in my property?
  • If I choose an adjustable-rate mortgage (ARM), will I be able to convert it to a fixed-rate if I wish to make a switch?

Your mortgage broker is a valuable resource who can help inform your decision. But keep in mind, they can’t read your mind. Having an open dialogue with your broker and asking detailed questions about the things that are important to you will enable them to have the right conversations with lenders about your and your mortgage needs, and find a mortgage with the interest rate, terms and flexibility that will work best for you. Ultimately, they can be the key to a successful homebuying experience.

Interested in working with a mortgage broker to crunch numbers and get your future home? Call Maurice Kwok at 416-618-9312, an Ontario Mortgage Broker with extensive experience, having served 18 years as a Mobile Mortgage Specialist across 4 major banks, and 10 years as a Mortgage Broker. Maurice is a professional equipped to assist with your mortgage needs. Remember: securing a proper pre-approval is essential.

Source: MCAP mortgage, a reputable lender we have collaborated with for years on both prime and alternate mortgages.

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