Acquiring a property is never easy: you are putting your money on the line and you have to sign a complex mortgage contract that commits you financially and legally. That’s why you have to choose your lender and mortgage contract carefully.
Two types of professionals can help you: the mortgage specialist and the mortgage broker.
The first one works for a financial institution, and he offers the mortgage contracts and the interest rates that are offered by this same institution. After knowing your goals and your financial situation, he will help you choose the loan that suits you best while establishing a personalized financing plan. As the mortgage specialist is paid by the financial institution he represents, his services are free.
The second, the mortgage broker, acts as an independent intermediary between you and the potential lenders. In other words, it “shops” your mortgage in light of market conditions and your credit history. He will first ask you about your financial situation, and then he will collect this information before submitting your mortgage application to the lender who he thinks is best for you. Since he is paid by the financial institution, which will ultimately grant the loan, his services are also free.
Which professional should we choose? It’s your decision!
The important thing is that it supports you from the start of your purchasing process in order to establish the amount that you can borrow without damaging your quality of life or your credit rating and to determine the possible sources of financing. Knowing your borrowing capacity, and even having a pre-authorized loan, puts you in a strong position when negotiating and making an offer to purchase.
Also, you must be able to trust it fully since it will play a decisive role in your transaction. He should be able to clearly answer your many questions about the down payment required, the amortization period, the frequency of payments to be considered, the costs of buying a property, etc.
Should you opt for a variable or fixed interest rate, for an open or closed mortgage? And what do the different clauses of your future mortgage contract mean?
If your advisor leaves you vague on these questions, look elsewhere! All of these elements require informed responses that take into account your financial situation, and of course, the interest rate you will have to assume.
Indeed, the interest rate is the sinews of war. The higher it is, the more expensive your property will be. In recent years, the rates offered have been very low and are similar from one lender to another. This is why, beyond the interest rate, you must take into account other elements: is it a good time to buy? Is tapping into your 401(k) plan and using the Home Ownership Plan a good idea for you? Will you be able to make your mortgage payments if interest rates go up?
All these questions require a global vision in terms of financial planning… So do not take it casually, and contact a mortgage expert right away for the best assistance.