Do first-time homebuyers really get any benefit from a mortgage broker?
Last week I met with Tom* and Marcy*, a couple in their early 30s who are interested in doing the mortgage planning for the purchase of their first home. They’re thinking of a property in the $700,000 range in Toronto or Mississauga. They have solid jobs; Tom’s an engineer making $80,000 at his firm, and Marcy is a social worker making $85,000. Their credit is excellent, with both their credit scores in the high 700’s and a solid track record of good, ongoing payments on several pieces of credit. As for their down payment, they have about $95,000 saved, so they’d use some of that for the down payment, but also they want to make sure they have enough for closing costs. Why use a mortgage broker?
So why would first-time homebuyers with great credit want to use a mortgage broker?
Tom and Marcy did quite a bit of research, scanning the web to educate themselves on mortgage terms and mortgage rates. They also popped in to the branches of the banks where they have chequing accounts and RRSPs. Marcy said, “It’s not that we don’t know anything about mortgages. But we don’t know what we don’t know. So we are relying on trying to get the bits and pieces from all these different sources.
“We want someone to put it all together for us.”
Mortgage broker benefits for first-time homebuyers
I posted a rant a while back on what first-time homebuyers should feel entitled to, from their mortgage professional. Basically, I believe you deserve to have your expectations massively exceeded and your lives made easier when going through the mortgage process.
Here’s what a good mortgage broker brings to the table:
A mortgage broker is an educator
When Marcy and Tom had gone into their bank, they were given a number that they qualified for, that’s it. What they had hoped for, but didn’t get, was a deeper understanding of their mortgage options, whether fixed rate or variable rate would be better for them, and to be able to make informed choices.
A mortgage broker knows all the significant Canadian mortgage lenders
A mortgage broker can give you pros and cons of multiple mortgage lenders. In this day and age of changing mortgage rules and tightening lender guidelines, it’s impossible for a person to know everything that’s available to them on the mortgage front. Mortgage brokers live in this space, day in, day out. Our job is to cut through the noise and help you figure out which lenders will work best, for you.
A mortgage broker is your planning strategist
A huge part of my job is mortgage planning. Right from the first meeting or phone call, we discuss potential obstacles and how to get around them successfully, check into credit improvement and credit repair, make sure the down payment is organized and ready to go, look at your income and job information to see which lenders will be most appropriate, and so on. Basically, together we figure out a Plan A, a Plan B, and a Plan C.
A mortgage broker is your financing quarterback
Yes, I know I’m mixing metaphors a bit here. But there’s really not a better way to put this! A mortgage broker will quarterback getting your mortgage from point A to point Z, anticipating what documents you’ll need, when you’ll need them, and helping you stay on top of everything. In addition, I coordinate between your realtor, your real estate lawyer, and your mortgage lender to make sure all goes smoothly, check whether anything has stalled, clear up any questions or missing info. Tons of stuff happens behind the scenes, and I consider myself the point person to make sure it comes together.
A mortgage broker gets paid by the lender, not you
“How do you get paid?” was one of Marcy and Tom’s questions. The answer: in the majority of cases, I’m paid by the lender you eventually choose, and there’s no cost to you. (The exception: if you’re in a situation where your credit is bruised, or there is some other aspect to your finances that requires using a B lender or a private lender, we’ll discuss that up front, so you can decide whether to wait, or whether to proceed. No surprises.) We might even end up placing your mortgage with the bank you normally work with – my clients have found that we’re often able to get a more a competitive rate, terms and conditions, than if they’d gone to the bank directly – but it means premium service layered on top, at no extra charge. A win-win!
Why 59% of next generation homebuyers are likely to choose mortgage brokers
If all the above sounds good to you, you’re not alone. According to Mortgage Professionals Canada’s June 2016 survey, over 40% of buyers looking at purchasing in the next 5 years intended to use a mortgage broker. This number jumped to 59% when they more fully understood the value that a mortgage broker brings to the table. Nice! 🙂
If you’d like to chat about your specific situation, please don’t hesitate to get in touch with me. I’d be happy to answer your questions and help you on your mortgage journey!
*Names and identifying details changed to protect my clients' privacy
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