Are you preparing to buy a home? If so, it will likely be one of the biggest purchases you’ll ever make. Most home buyers need to start by obtaining a mortgage. This type of financing represents a major commitment—one that will likely span the course of years, or even decades. Given the impact that your mortgage will probably have on your finances, it makes sense to seek out the right lender.
Many home buyers believe that it doesn’t matter which lending institution they work with, but that couldn’t be further from the truth. Some professionals can offer you lower interest rates and a better selection of financial products, among other benefits. If you’re ready to start the process of obtaining a mortgage, here’s how you can ensure that you find the right lender.
Broker or Bank?
One of the keys to finding the ideal lender is knowing the landscape. In Ontario, there are several different types of institutions that can provide you with a mortgage. The two that are most commonly used are traditional banks and mortgage brokers. Here are some of the biggest differences between these options.
One of the most significant advantages of turning to your bank for a mortgage is that it can simplify the process. Getting all of your financial services in one place usually means having fewer logistics to track. Since you already have a relationship with your bank, you may also feel more comfortable working with them than with a new institution. The biggest potential downside is that they can only offer you their own products and services.
Brokers are licensed professionals who specialize in mortgages. They have access to financial products offered by many different lenders, and they’ll do your comparison shopping for you. They also take care of negotiations, then present you with your best possible options. On the downside, you won’t have the same loyalty-based relationship with a broker as you will with your bank.
Another crucial step toward getting a mortgage is prepping your finances. Start by checking your credit report to ensure that it doesn’t contain any errors. You may also decide to take action to improve your score in the months before you apply. In general, you should avoid starting any new lines of credit, since it could send the wrong message to lenders.
If possible, try to remain with your current employer during the application process. Staying at one job for an extended period helps show that you have the stable income required to make future payments.
Before you obtain your mortgage, it’s wise to go through the pre-approval process. Home buyers who are pre-approved by a lender are generally taken more seriously by sellers than those who aren’t.
Ask the right questions
Before committing to a lender, it’s important to ensure that they’re well positioned to meet your needs. Each time you sit down with a professional, be prepared to ask questions. Some of the most critical have to do with turnaround times—both for pre-approval and closing.
Be sure you’re aware of the fees you’ll have to pay. These include not only payment to your lender, but the costs associated with your appraisal and other outside services.
Lastly, try to get a sense of how thorough the professionals you speak with will be. Before they start providing you with loan options, they should ask questions and get to know your situation.
Buying a home is a major commitment. Fortunately, choosing the right lender can reduce much of the stress associated with the process. Don’t forget that your real estate agent is a great resource, and they should be able to recommend a professional with a great track record.
For over 30 years, our clients have trusted us to minimize risk, offer unbiased opinions, and ensure their best interests are served. Contact us today to talk about your needs, by emailing us at [email protected] or calling us at 416-441-2888 ext. 772.