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13 Sep

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Contacting local mortgage brokers and considering your home-buying options is an exciting process. However, many buyers make mistakes when evaluating their brokers. These evaluation errors often cause them to overspend on broker services. Or, buyers may not get the required information about their full range of mortgage options.

Hiring qualified mortgage brokers, however, can be a challenging process. Therefore, let’s explore the questions you should ask your chosen Ontario-based mortgage broker.

What is the fee for your services?

Before establishing a working relationship with the broker, make sure you know exactly how much you’ll pay for their service. For the majority of the time, the expertise of the mortgage broker is free. As well, you’ll usually only have to cover the appraisal and any additional legal fees associated with the mortgage-brokerage process.

Ensure that you know how the broker earns their money, and whether their fee will come out of your budget. Usually, the lenders pay for the broker to find clients, and therefore the lenders will pay for the broker’s services.

Can I get pre-approved?

The pre-approval process will help you determine exactly how much you can afford to spend on a home. Remember, however, the pre-approval doesn’t guarantee that the lender will finance your mortgage. Therefore, if you have been pre-approved and you’re now bidding on homes, then you may wish to make offers contingent on securing financing.

Which lender is best for my financial position?

Your mortgage broker’s job is to work with lenders to secure financing for their brokerage clients, and so they will have contacts with various lenders. They can help you determine which lender offers the best value for your particular mortgage. Whether it’s a lender that works with self-employed homebuyers or one that works with new immigrants, discussing the various options with your broker can help you pinpoint lenders that will deliver value for your mortgage.

Which interest rate do I qualify for?

Your broker can help you analyze the current interest rate environment and determine your qualifying rate. They review several elements during this process, including your current credit rating, employment status, and debt. By understanding the qualifying rate for your mortgage, you can then gain a better understanding of your overall mortgage payment costs.

What are the additional mortgage costs?

Your mortgage broker can go over all the additional costs with you while they connect with qualifying lenders. These costs include the following:

  • Legal fees
  • Home inspections
  • Land transfer taxes
  • Title registration fees
  • Appraisal fees

Gaining a clear understanding of the additional fees involved in the purchase will help you plan more effectively and prevent you from experiencing shock when the bills arrive later.

How large of a down payment should I place?

The size of the down payment you place on the home is another vital element to analyze. Many buyers mistakenly believe that the larger the down payment, the lower the interest rate they’ll receive. The reality, though, is quite the opposite. Buyers placing as little as 5% down on a home can receive the same rate as those who place a 20% down payment. Your broker can help guide you regarding your current financial position and the down payment that best fits your home-buying goals.

Should I choose a fixed or variable rate?

Choosing between a fixed and variable rate can make all the difference when it comes to your monthly mortgage costs.

While we’re in a low-rate environment, most homebuyers choose a variable rate mortgage, as the total cost has been lower on variable rate products over several years. However, if your broker believes that interest rates may rise soon, then they may recommend a fixed rate. This fixed rate remains the same throughout your mortgage contract. You will know exactly how much you’ll be spending on your mortgage on a month-to-month basis.

Making the decision involves analyzing the market and relying on your local Ontario-based mortgage broker to provide nuanced guidance.

What is the prepayment penalty?

When choosing a mortgage product, you should take the prepayment penalty into close consideration. This prepayment penalty could be thousands of dollars, and it may cost you more money to pay off your mortgage early than you would have spent on your regular monthly payments. Variable rates tend to have the lowest prepayment penalties of about three months interest. Speak with your broker directly and ensure that you have all the penalty details before signing a mortgage contract.

How much should I budget for closing costs?

Carefully review your total closing costs before deciding on a mortgage. You will have to consider each of the fees involved in the finalization of the purchase. These costs may include additional legal fees, as well as full payment of your land transfer tax. You may also have to pay for a home inspection before you complete your move. Make sure that you have your total closing costs ready in your accounts to help you streamline the purchase process.

Which ownership costs should I consider?

While your mortgage broker specializes in mortgages, they may also be able to help you budget for the total costs of homeownership. They will likely recommend, for example, that you have a life insurance policy. So, if anything happens to you, the homeownership is transferred to your family.

Consider the total cost of maintaining the home, including repair expenses and regular lawn care and snow removal. Each of these elements should be a line item in your homeownership budget. Analyzing these elements now will place you in the ideal position when you finalize the purchase and move into the home.

Book an Appointment With an Ontario Mortgage Broker Today

Our team at Mortgages Mortgages will help guide you in securing your ideal mortgage and completing a successful home-purchase process. We have decades of experience serving clients across Ontario, and we’re available any time to answer questions and provide professional support. Are you ready to speak with a broker? Call our offices today.

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