Tuesday, 14 October 2008

Mortgage Brokers

The second step after getting a real estate agent is to get a mortgage pre-approval. One major advantage of getting pre-approved for a home mortgage loan is that it gives you a firm idea of how much you can borrow. If you know how much you can borrow and how much you have for a down payment, you can easily set a maximum price as you search for a home. You will not waste countless hours looking at homes, only to find out afterwards that you cannot afford the mortgage. (Quote)

It is important to remember that the amount of mortgage you will qualify for is the maximum. It is the amount that the lender feels you can afford, but it is not necessarily the amount that you want to pay. It sometimes is advantageous to be conservative here. For example, if you qualify for a $100,000 mortgage and you have $15,000 available in cash for downpayment and closing costs, you are qualified to buy homes with a maximum selling price of $115,000. So as to not push yourself to the limit, you may want to look at homes that sell in the $100,000 to $110,000 range. (Quote)

How do you get a mortgage pre-approval? The easiest way is to get the help of a Mortgage Broker (which real estate agents normally have). A mortgage broker acts as an intermediary who sells mortgage loans on behalf of individuals or businesses, so (s)he will have a portfolio with different mortgages from different companies, and you'll have all the information in one place without having to go from bank to bank asking for one.

Typically the tasks of a mortgage broker are:
  • Assessment of the borrowers circumstances. This may include assessment of credit history (normally obtained via a credit report) and affordability (verified by income documentation).
  • Assessing the market to find a mortgage product that fits the clients needs.
  • Applying for a lenders agreement in principle (pre-approval)
  • Gathering all needed documents (paystubs/payslips, bank statements, etc.)
  • Completing a lender application form.
  • Explaining the legal disclosures.
  • Submitting all material to the lender.

So, if you want to know how much you can afford is good to get the services of a mortgage broker that will explain everything to you, giving your credit history and others, but please don't do this without a real intention to get a house since they will check your credit history and that will stay in it, telling everyone that checks it that you already tried to get pre-approved.


Zhu said...

Especially right now, I think it's very important that people double-check their finances and buy something they can afford...

Great advice!

Aiglee said...

Thanks Zhu!! I think so too :D