Consider a mortgage broker first

By Mark Kerzner, President TMG The Mortgage Group Inc.

So what comes first - the chicken or the egg? In the real estate industry that question gets turned into the following -- if I am going to buy a house do I speak with my mortgage broker or Realtor first?

First of all, kudos if you knew that it’s vital to speak with both a mortgage broker and a Realtor when you’re thinking about buying a home. Some will choose the simpler and often more ineffective path of trying to sell a house privately. Some will blindly walk into a bank branch to apply for a mortgage from a financial generalist.

TMG The Mortgage Group strongly encourages our clients to use a licensed Realtor for buying and selling real estate. They are experienced professionals who know your local market and can guide you through the processes of purchase agreements, deposits and conditions. TMG brokers work with many Realtors and will often refer clients to those who have proven to be exceptional and professional service providers.

As well, mortgage brokers often receive referrals from qualified and valued real estate agents and we are grateful for those relationships that we have developed. Those Realtors know that mortgage brokers are professionals, just like they are, and who are experts in their fields. Furthermore, they know that successfully removing financing conditions on agreements of purchase and sale are vital to completing the real estate transaction.

Consider your own experience with the professionals in your life and those you turn to for advice. In my own experience, I think the following:

• I trust my accountant implicitly. He understands my financial health and goals. From time to time I ask him if he knows a good life insurance broker, financial advisor, etc.
• I trust my circle of friends. Many of us went to school together, hang out, do business together, have fun, etc.. Some are lawyers, accountants, entrepreneurs, Realtors, teachers, and I refer people to my circle of friends whenever I can.
• I trust my referral sources and lender partners. They understand that our purpose is to provide access to choice and unbiased advice, leading to the most appropriate mortgage financing solutions for your unique situation.

What is still a little unclear to me though is why more home purchasers and sellers do not go to their mortgage broker before doing anything else. Just as Realtors are uniquely equipped to refer clients to mortgage brokers, so too are mortgage brokers with respect to Realtors.

 On HGTV’s Property Virgins, the host begins by confirming that the house hunters on the show have been pre-qualified for a mortgage so they can determine the price range of the houses worth looking at.  At that point they can start their housing search.

Even if you’re selling, consider speaking with your mortgage broker first. Here’s why it makes sense. If you’re selling you may be buying as well. If you’re “moving up” to a larger, more expensive home, then you will need to know what you qualify for. If you have a mortgage and wish to pay it off you will want to understand penalty and breakage costs. Alternatively, you may wish to port (transfer your mortgage) with an increase or decrease to the mortgage balance. A mortgage broker can assist in all of these scenarios. 

Know where you stand. Know what you can afford.  Start your next real estate transaction with a conversation with a mortgage broker first.

Buying a house doesn’t have to be stressful

Buying a house should be an exciting time but it can get pretty stressful, according to the Bank of Montreal’s Psychology of House Hunting report released on Thursday, May 2. The biggest worry is finding problems after moving in. The next worry is that prices will drop and the house won’t be worth the original purchase price.

The house buying process can be overwhelming for first time home buyers but also for move-up buyers as well. It doesn’t have to be if you put together a team of experts who will guide you through the entire process.

It starts with a mortgage professional who will take a look at your finances, including your credit score, to qualify you for a mortgage. A lot of information about you and your credit management abilities come up during this process. Having derogatory items on your credit report doesn’t mean you can’t qualify for a mortgage. Everyone’s situation is different and a mortgage broker is familiar with most situations and can offer options.

Once armed with a pre-approval, you can confidently work with a Realtor to find the right house for you. According to the report, on average, home buyer spend five months house-hunting and visit 10 locations before deciding to buy. It’s certainly a good idea to take your time to make sure to get the house that’s right for you. Interestingly, the report found that 33% of home buyers felt rushed into making a purchase and increased to 39% for first timers. Sixty-eight per cent were prepared to settle for a home that was less than perfect. Four-fifths of prospective buyers said they know a home is right for them as soon as they step inside.

Once the Offer to Purchase is made, working with a trusted lawyer is the best way to make sure there are no surprises at closing. The bottom line is to take your time, work with professionals and do some research.

Here are the top five mistakes new homebuyers make:

1. Not getting pre-approved. Without a pre-approval you’re actually going in to the home-buying process blind. You won’t know what you can afford or if you even qualify for a mortgage. 
2. No Home Inspection. This is a must, especially in older homes.
3. Not budgeting for the increased costs. Home ownership comes with additional costs that you don’t have when renting. In addition to mortgage payments, you will have property taxes, higher utility bills, home insurance and extra costs for maintenance and repairs.
4.  Not knowing the closing costs. A lot of buyers forget about the closing costs, which includes land transfer tax, title fees, the lawyer’s fee, etc. Don’t get caught short.
5. Forgetting about future needs. If the home you’re purchasing is a starter, then perhaps a two-bedroom will work for you. However, if you plan to start a family, you might want to look at a three bedroom. Or if you there any other possible living arrangement changes, make sure to factor those in.