For most people, a house – or, more accurately, a mortgage – is the largest purchase they will ever make. That’s right. “Home buyers” aren’t actually purchasing that cute little plot of land, the house, or even the white picket fence. The bank is purchasing all that, and the buyer is purchasing the mortgage from a lending institution.

With that in mind, you can see why finding the right mortgage is so important. It’s just as important as finding the house of your dreams. You don’t have to live in your mortgage, but you will be paying it off for 15 or 30 years or more. A good mortgage broker can help prospective home buyers find the mortgage that fits their lifestyle.

But how do you find the right mortgage broker?

First, let’s understand what a mortgage broker does. A mortgage broker:

• Pre-qualifies or pre-approves buyers for a loan. This lets buyers know the price range of house they can afford, narrowing the home search to realistic parameters before they begin.
• Offers a variety of mortgage options to meet your needs. Loans aren’t one size fits all, and a mortgage broker helps you sift through the vast array of options to find one that meets your needs.
• Helps you find the best interest rates. A mortgage broker should stay in touch with you throughout the loan application process, keeping an eye on interest rates in order to get you the best rate available. He understands the market trends better than someone outside the industry, so he can advise you to “lock in” your rate or wait to see if interest rates fall.
• Walks you through the loan application process. Mortgage applications can make filing taxes look simple. A mortgage broker will help you every step of the way. He can offer advice on how best to manage your finances in the months before closing on a new home, and lets you know what paperwork and documentation is necessary to complete the application process.
• Offers a “good faith estimate” of closing costs. Your mortgage broker should provide a line-by-line estimate of all costs associated with buying a home.
• Works hand-in-hand with the real estate lawyers, agent and any other necessary parties to bring the deal to closing.

A mortgage broker can save you time, money and hassles by helping you choose the right loan. But just as loans are not one-size-fits-all, neither are mortgage brokers. Before selecting a broker, consider your needs. Are you:

-          A first-time home buyer?

-          A real estate investor?

-          A home owner looking to refinance?

Make sure the mortgage broker you select is accustomed to dealing with customers in need of similar services.

Finding a Mortgage Broker

It’s easiest to find a broker by word-of-mouth; the real estate agent may be able to recommend a good broker. Otherwise, talk to family and friends who have recently purchased a home.

Most mortgage brokers get paid by the lenders; the broker should disclose all commissions or fees, which should not equal more than 2 percent of the total loan value.

Questions to Ask

When you narrow down your choices of brokers, consider the following questions:

• Does the mortgage broker answer all your questions and make you feel comfortable about the process?
• Is he readily available by phone or e-mail to address any concerns or questions? Brokers need not be “on call” 24-7, but you should be able to expect to hear from them within 24 hours.
• Does the broker work with a broad range of lenders, making it more likely he’ll be able to find the best loan for you?
• Is the broker willing to provide in-depth written information about the different loans that fit your needs?
• Do you feel as if the mortgage broker has your best interests in mind? A broker should not pressure you to select one mortgage product over another without disclosing his motivations and explaining the reasons clearly.

If you can answer “yes” to all the questions above — and that broker has a loan product that fits your needs – congratulations! You’ve found the right mortgage broker to lead you on your journey toward home ownership. If not, keep looking – the wrong mortgage broker is far worse than no mortgage broker at all!

Photo by Rev Dan Catt

Related posts:

1. What You Need to Know About Home Equity Loans
2. How to Read a Product Disclosure Statement (PDS)
3. Be Careful with Secured Loans
4. What You Need to Know About Your Potential Loan Company
5. An Introduction to the First Home Buyers Grant