Mortgage brokers charge a fee for their service in addition to the standard closing costs for a loan. This leads many to choose to go directly to a bank or credit union for a home loan. However, that is a mistake. Mortgage brokers provide a valuable service to their clients, and that is why there is an entire industry aiding home buyers and home owners. These clients are seeking one more of the benefits of working with mortgage brokers. Here are the top 5 benefits of working with a mortgage broker in Montreal.
Don’t start home shopping until you are pre-approved for a loan. Being pre-qualified isn’t good enough, since it takes time to close on the home loan and be able to offer that money to the home seller. You want to be pre-approved for a mortgage and be able to show the home seller or their real estate agent that you really can meet their price and close quickly. If you find that you can’t stand renting another month or now need to upgrade in home before the new baby arrives, you don’t have time to comparison shop mortgages. A mortgage broker can help you get approved for a home loan quickly. They may do so in hours, or they may take a few days, but it is almost always faster than going through the bank.
If the mortgage is for a non-traditional home, you may not be able to close on the loan fast enough to buy the property. For example, it may take extra steps to be allowed to buy a home that requires extensive repairs. Extra scrutiny is applied to other properties, as well. If you want to buy a home and renovate the basement to put in a mortgage helper, the lender may require additional paperwork and assessments before you can close on the loan. If you want to buy a duplex and live in half, the bank may approve it but require far more information from you. You may require the help of a mortgage broker to find a lender who will approve you for a home loan with a small down payment or allows you to buy a rural property.
Is your dream to retire and live off the rental income of several rental properties? As we grow older, the equity in our current homes is high. You may want to cash out the home equity and buy investment properties. While you can find mortgage lenders to give you a cash-out refinance, it is much more difficult to secure a mortgage for investment properties. Talk to a Quebec mortgage broker.
Mortgage brokers tap into a broad network of lenders to aid their clients. For example, a mortgage broker in Quebec isn’t limited to mortgage lenders in Quebec. They may help you secure a mortgage backed by an Albertan credit union. Or they may help a client find a rural credit union that specializes in funding purchases of farms, rural properties and cabins.
Most mortgage lenders won’t let you take out a mortgage with them to buy a vacation home unless it is in a top tourist destination. Even then, they may allow you to buy a condo in a popular project but not a rural home half an hour drive away. Their goal is to offer loans secured by valuable property and one that they are almost certainly able to sell if you can’t pay the payments.
Major fixer-uppers are another type of property most lenders won’t touch. Think about the homes you see on renovation shows. These homes may need tens of thousands of dollars on repair, and this could equal half the value of the property. Most lenders consider major renovations a risk, though they’ll generally allow you to borrow several thousand dollars to fix the boiler or driveway. If the home needs to be re-piped, have the foundation repaired or mold remediated, it will be considered too great a risk by most mortgage lenders. You’ll need a mortgage broker’s assistance to take out a home loan to buy the property and raise the money required to make repairs, if you don’t have the cash on hand.
Yet another category of home loans most mortgage lenders won’t support is the bad credit home loan. Perhaps you’re coming out of bankruptcy. Maybe your credit was trashed during a divorce as each side refused to pay bills they thought the other owed. If your credit score is so low you’re considered to have bad credit, you need the assistance of a mortgage broker. And this is true even if the bank is willing to extend a loan. Too many banks will charge those with bad credit a high interest rate or steep fees. A mortgage broker can connect you with lenders who will assess your personal situation and manually underwrite a loan. They will find lenders who won’t penalize you for a bad breakup or business failure four years ago. Or they may find you a much better interest rate on the loan because they know lenders who won’t penalize you for prior bad credit.
Mortgage lenders may charge a fee for their services, but the existence of the industry shows that their clients find it worth every dollar. Mortgage broker can often find clients a home loan with a much lower interest rate than they currently pay. Or the mortgage broker can find you a mortgage lender that has much lower closing costs. Now you can afford to buy a home with the cash you have. If you need to roll the closing costs into the home loan or want a second mortgage to allow you to avoid PMI, they can find a mortgage lender that will help you. All of this adds up to lower interest rates and loan costs, and it makes the mortgage broker’s fees a relative bargain.
Mortgage brokers can save you time. They help their clients fill out paperwork and do so correctly. Now you don’t waste time filling out loan applications that get rejected because you forget key information or didn’t provide the necessary paperwork. Nor will you waste time applying for a mortgage with a company that won’t extend a loan in your case. By sending mortgage applications to lenders that will work with clients like you, you only have to fill out the paperwork once or twice and then you’re done. You should be approved in a day or two. And the mortgage broker can help you get approved in time for that open house or your visit to the area where you want to move. You’ll also avoid the rush to fill out mortgage applications when you’re busy trying to tour houses.
Mortgage brokers are the best choice for getting the mortgage terms you want. Don’t sign up for a mortgage with high prepayment penalties or limited time frames for making extra principal payments. Don’t pay a hefty fee to refinance from a monthly to biweekly mortgage. And know that you can negotiate loan terms like this with a mortgage broker.
If you aren’t sure if you will stay in the house for several years, discuss the benefits of a portable or assumable mortgage with your Quebec mortgage broker. A portable mortgage is one you can take with you when you buy a new home. A side benefit of this is that you won’t have to requalify for a mortgage when you need to move. An assumable mortgage allows you to sell the house and have someone else take over the payments immediately. These options are not necessarily the default when you take out a home loan. Another option is changing the renewal period. The vast majority of Canadian mortgages are 5 year fixed rate loans. If you don’t know if you’re going to be moving soon, negotiate a one, two or three year loan term.
These aren’t just terms and conditions to negotiate when you are buying a new house. A majority of Quebec mortgage customers simply renew their current mortgage with the same terms with their mortgage lender. Yet they have the ability to renegotiate the mortgage terms and switch lenders without penalty. Now is the time to get rid of the mortgage terms you don’t like or negotiate a lower interest rate. Alternatively, you could work with a mortgage broker in Quebec to put down a lump sum against the mortgage balance when you renew the loan. That’s equivalent to a prepayment on the loan, and you can ask the bank to accept it without penalty. You have nothing to lose by asking, and you can save so much money over the life of the loan if they agree. Or let a mortgage broker argue in favor of a lower interest rate at renewal time. Perhaps your credit score has improved, or you have far more equity in the property. Start talking to Quebec mortgage brokers in the months before the loan comes up for renewal so that you know all of your options. And that includes the information on mortgage lenders who will take your business if your current lender won’t budge. Having the ability to walk away gives you leverage in the negotiations.