If you are in the market for a new home, you may be wondering what you should do first in your home buying journey. A lot of people think that you set aside money for your downpayment and closing costs, begin your house hunt and then apply for a mortgage. In a competitive housing market this can put you at a disadvantage compared to other buyers. Here, we are going to discuss the benefits of going to see a mortgage broker before you start shopping for a new home.
Why should I see a mortgage broker first?
Though it may seem counterintuitive, seeing a mortgage broker first will give you a realistic idea of what to expect with your credit and budget. This ensures that you don’t experience heartbreak when that perfect home is outside of your budget. Another advantage includes opening doors to a variety of lenders before you are too far along in the process.
Scheduling an early consultation with a mortgage broker will ensure that you are prepared. This is particularly important for first time home buyers as you will receive guidance for each step of the process.
So how does seeing a mortgage broker first help me?
It will help you better understand what you can afford and what sort of financing terms you should expect from your mortgage. Nobody wants to find their dream home only to learn that they can’t be approved for a mortgage that will cover it.
When you work with a mortgage broker you get unbiased advice, at no cost to you. Mortgage brokers are experts at financing arrangements and their only concern is securing the right product for you. Additionally, the earlier you meet with your broker the earlier you can be pre-qualified.
Speaking of pre-approvals…
A mortgage broker can secure a pre-approval for you which will allow you to know the maximum mortgage you can qualify for. This will open doors for you, as sellers will be confident that you are able to afford the house. Once you have your pre-approval the house-hunting part becomes much easier. Sellers will likely take you more seriously and you will have a concrete idea of not only what you can afford, but what you will be expecting to pay throughout your mortgage term.
It is worth stating that though a pre-approval is incredibly important, it is by no means a guarantee that you will be approved for a mortgage. However it will help during the home buying and even house hunting process. If you would like more information on pre-approvals you can read our recent blog post here!
It helps to have your paperwork in order
Seeing your mortgage broker first will ensure that you have all the needed paperwork ahead of time. A mortgage broker will let you know what they need, from T4’s and pay stubs to bank statements to confirm your downpayment. This can be rather tedious, but a necessary process that ensures your broker can find the best deal for you. Therefore, getting started early will help to make the process easier for everyone!
Another less discussed topic is that complications during the mortgage process can happen. We’re all only human, and should a complication due to a clerical error arise, it could cause the seller to to go with a different buyer, or pull out of a deal. Having your paperwork in order ahead of time mitigates these risks.
You will have a better understanding of costs. All of them…
There are many other costs that come with buying a new home. Closing costs are dependent on several different factors and can be as high as 4% of the purchase price of your new home. When you work with a mortgage broker they will give you an in depth understanding of what these costs are, and how much you can expect to spend. If you would like to learn more about closing costs, check our our recent blog post here!
It’s important to understand your options
When you decide to buy a home there is a lot that you have to consider. From pre-approvals, to price-ranges, closing costs, to picking your lender. Speaking to a mortgage broker should be your first priority. A mortgage broker with both work for and with you to make sure you get the best product for your lifestyle and situation! By doing this early you not only avoid scary complications, but you can dedicate the mental space needed for each step of the home buying process!
If you are considering buying your first home or are planning on shopping for something new, give me a call at (705) 333-4338 or get in touch with me here! I’d be happy to help you find a mortgage for your new home.