SOME IMPORTANT TIPS ON HOW TO DO IT RIGHT!
When shopping around for mortgage financing this guide will help you with your due diligence.
There are 7 simple questions we recommend you ask your lender. If they cannot answer any one of these questions properly, you should strongly reconsider dealing with them. If they do not know the answers…RUN…DON’T WALK to a Professional that does!
There are 7 simple questions we recommend you ask your lender. If they cannot answer any one of these questions properly, you should strongly reconsider dealing with them. If they do not know the answers…RUN…DON’T WALK to a Professional that does!
Quick Tip Shopping Guide
- Will multiple credit checks affect my chances of approval? Yes, when shopping for a mortgage on your own, multiple credit checks are required at each lender you visit. When working with a Professional Mortgage Planner only one credit inquiry is required to access all available Lenders.
- How do I know the Lender / Mortgage Professional is licensed & in good standing? The Mortgage Brokers Act has recently changed to enhance consumer disclosure and protection. With the new Act all Mortgage Brokers & Agents operating in the Province must display their Broker & Agent registration number. This number can be verified with the Financial Services Commission of Ontario on their website; www.fsco.gov.on.ca or the comparable Provincial website for all other Provinces in Canada. Check a Broker / Agent registration at: https://www2.fsco.gov.on.ca/mbslist/Agents.mbl . As a prudent first time home buyer you should take advantage of this new system to verify that the Professional you have chosen is registered with FSCO & the Province and is in good standing.
- What are mortgage interest rates based on? Since mortgages are our business, it is critically important to know the answer to this question to ensure you’re dealing with a professional that knows the business and can therefore guide you properly prior to commitment and post funding. Do not work with a lender who has their eyes on wrong indicators, or worse yet, has no idea what the indicators even are. Each week your Professional should monitor fixed & variable rates, bond yields, inter-bank lending rates. These are all tied to the interest rates offered to you.
- The correct answer for fixed rate mortgages is Bond Market Yields determine the price of the mortgage.
- For variable rate mortgages the Bank of Canada determines the rate by setting its rate which then determines the Prime rates Banks charge their customers (you).
- Inter-Bank lending also plays are role in the lenders cost of funds which ultimately translates into the rate offered to you.
- What is the next Economic Report or Event that could cause interest rates to move? If a lender cannot explain how Mortgage bonds and interest rates interact and where they are headed, why would you trust their advice for your costliest investment? Especially important for variable rate mortgages, a Professional Mortgage Planner should have this information at their fingertips. Your Professional should provide monthly Economic Forecast’s that detail every upcoming event that may impact your interest rate on your mortgage and/or the rate you may consider locking into.
- If the Bank of Canada changes the B of C Prime Rate, how does this impact my mortgage? If you’re in a variable rate mortgage this is important because the rate the Bank of Canada charges will determine the rate your Bank will charge you. A variable rate mortgage fluctuates with Prime and typically the Prime rate is 1.75% higher than the Bank of Canada rate. This impact is immediate and may impact your next mortgage payment.
- Do you have access to Daily Bond quotes? If a lender or mortgage officer cannot explain Bonds and how the bond quotes can determine the rate charged on your mortgage or the rate you may want to lock into if you’re in a variable, you should be very concerned.
- What strategy are you recommending and why? The key here is the word “strategy”. If a lender cannot articulate the strategy behind their recommendations to you then they are simply quoting a rate, which anyone can do. On your largest investment make sure you are dealing with someone who has a plan for you.
- What commitment are you giving me to personally manage my mortgage over the long term? This is the most critical question of all. Many lenders, especially bank personnel, have no desire or ability to proactively manage your mortgage over the long haul. How can you take advantage of changing markets in the future if no one is watching them for you? What if the long term rate you are considering today drops significantly in a few years? Who will ensure you don’t miss an opportunity to renegotiate? If you are considering a variable rate mortgage why would you do this with someone who is not committed to keeping an eye on it? At Axiom Mortgage Solutions, FSRA #12403 we truly believe our job begins when your mortgage funds. Anyone can sell you a mortgage but only truly committed mortgage professionals can manage that mortgage over the long term. With this long term management approach we can significantly reduce your total cost of home ownership, isn’t that the point?