As more and more homeowners explore their mortgage options, especially in today’s market, they’re realizing the added benefit of using a mortgage broker, often at no additional cost to them. The most obvious benefit of a mortgage broker is access and exposure to more lending choices, whereas, with your bank, they can only give you what they can offer (internally). Most people have realized that their banks are not trying to give you the best, but often what’s best for the banks…
..but okay, you’re sold on the idea of using a mortgage broker but what does the process look like?. You’ll soon find that the process is familiar and should not be similar across all mortgage broker operations.:
Initial consultation & Pre-qualification: When you first approach a mortgage broker, you will usually talk about the reasons for your mortgage inquiry (purchase vs refinance vs equity take-out) and a brief overview of your overall profile which should touch on your income, credit, and down payment capabilities. From here, the broker should get a sense of what they can offer you and in what ways they can assist. This then should lead to a pre-qualification application which would allow the broker to do a deeper dive into everything to confirm their initial findings of the possible outcomes… the mortgage broker should provide you with the necessary feedback to move forward with your next steps (look for a property or get ready to apply) …
Look for your home and make a conditional offer: When you have a general sense of what you can afford based on your pre-qualification, you simply go out there and look for a home that fits your lifestyle as well as stays within your prescribed affordability range. Once you’ve found your home, you simply put in a conditional offer to purchase the home based on your ability to secure a mortgage commitment within a reasonable amount of time (typically 5 business days). Now it’s important to note that most realtors will tell you that purchase offers without conditions are more attractive than those that contain conditions, but I’m here to tell you that they have nothing to lose if you ultimately fail to secure financing and you have committed to the purchase in a bold attempt get your offer accepted. In other words, it’s a risk that you are certainly able to take, but we would never advise you to do so. Ultimately, mortgage lenders (including banks), do not conduct a thorough review of your application, supporting documents, etc., until you have an accepted purchase agreement. This is because they simply can’t put that level of effort into “pre-approvals” that may or may not materialize into a business transaction for the banks….
Apply for a mortgage, have your documents ready – If your offer has been accepted, then the next step is to simply apply for a mortgage approval. Although it’s best practice to have all your supporting documents ready to submit, such as job letters, paystubs, bank statements, etc.…you should at the very least begin to gather everything that will be requested once the underwriter reaches out to review the file…
Mortgage approval – once the underwriter has reviewed the file and is satisfied with its completeness, they will issue the approval. You and your mortgage broker will review the terms and conditions of the approval and you should take this opportunity to discuss any questions you may have. Once you are at this stage, you should understand your responsibilities as a borrower and all the costs associated with the mortgage and other disclosure that the broker will share. When you are ready to do so, you simply sign the documents and provide any outstanding documents that would be required to complete the file. The broker will then relay this information to the underwriter who will “sign off” on the package for your lawyer to receive formal mortgage instructions to prepare for your purchase closing.
Closing day – On the day of closing, your lawyer would have requested the funds necessary to complete your purchase and the lender would wire those funds to your lawyer’s trust account so that they can complete the transaction. After the mortgage is registered, it’s official, you know own your home!
As you can see from the above breakdown, it’s not a complicated process, at least from your perspective. A broker’s job is to make it as uncomplicated as possible for you to go through the process without experiencing the kind of confusion you would otherwise feel if you didn’t have a guide. Technically speaking, there as a ton of rules, regulations, and guidelines that exist, but this level of complication is for the mortgage broker to bear behind the scenes. Ultimately, our job is to take a complicated process and make it as uncomplicated as possible for you.
So, if you are thinking about buying a home, refinancing your existing mortgage, or any other mortgage-related needs, feel free to reach out and let us help you keep it uncomplicated. – 905-455-5005