Mortgage Broker FAQ
What do you do as a mortgage broker?
I act as a middle man between a mortgage lender and a person seeking a mortgage loan. I use my experience and negotiating power to get you the best deal on a mortgage loan, or I can help get you a mortgage when your bank has turned you away.
Do you work for a bank?
I do not work for any bank or lender. I am a licensed mortgage agent that works for you!
What do you charge for your services?
In most cases, I don't charge you anything! My fees are paid by the mortgage lenders after your mortgage deal is secured. There are certain circumstances where I may have to charge you a fee directly, depending on the type of mortgage loan, but that's something we will discuss upfront right away if it applies to your case.
How do I know if a mortgage broker is licensed to work for me?
In Ontario, every mortgage broker and agent needs to have a FSCO license. Check for the existence and validity of this license number before you work with someone for your mortgage.
How do I become a mortgage broker?
What kind of clients seek mortgage loans from you?
I work with all different kinds of clients. First time home buyers, young professionals, senior executives, retired couples, individuals with bad credit, self-employed individuals, just to name a few.
What's the difference between fixed and variable interest rates?
A fixed interest rate is fixed for a specific period of time, usually the term of the mortgage. This term can range anywhere from 1 year to 10 years. A variable interest rate will fluctuate with changes in the prime rate. The payments are still the same every month, but when rates go up, more of the payment goes to paying interest instead of principal.
What's the minimum down payment?
If you have good credit, you can provide a minimum of 5% down. If your credit is not great, you're probably looking at needing a down payment anywhere from 15-35%.
Can I use gifted money for my down payment?
The general answer is yes, but there are specific requirements. Most of the time the funds must come from a family member and must be validated as such. Also, they may have to be present in your bank account for a specific period of time. Finally, certain mortgage loans have a limit on the amount of gifted funds that can be used towards the down payment.
Is paying a mortgage insurance premium necessary?
Paying a mortgage insurance premium is necessary if your down payment is 20% or less.
Do I need to get a pre-approval?
The short answer is yes. There are several benefits to obtaining a pre-approval that shouldn't be ignored, like: interest rate secured for 60 to 120 days, greater negotiating power during the offer process because you are a serious buyer, less work required at closing because you've already started the process and finally, by getting a pre-approval, you'll know exactly what you can afford, enabling you to shop with confidence.
Is an appraisal necessary?
Appraisals are necessary for any conventional mortgage loan with a 20% or more down payment. At this level of down payment, the mortgage is uninsured so the lender is going to want to verify that the purchase price is close to the property's fair market value.
What's the difference between a cosigner and a guarantor?
A cosigner will be registered on the title of the property, making them a co-owner of said property. On the other hand, a guarantor is someone who guarantees that the monthly mortgage payments will be made. Guarantors can be removed from the title at a later date.
How long does it take to get a mortgage?
The longest part of the process is gathering all of your personal information required by the lenders. If you happen to have everything ready, then approval theoretically could happen in as little as 48 hours! Ultimately, the longer it takes us to receive your information, the longer it will take to get you an approval.
What if I can’t confirm my income or if it's not stable?
If you are self-employed, there are alternative ways to confirm your income. The most common documentation required is your last two year's notice of assessments. There are other requirements depending on your specific circumstances.
How much should I spend on my home?
Most lenders don't allow you to spend more than 32-44% of your monthly income on your mortgage payment.
Is a mortgage loan useful for debt consolidation?
Absolutely. Many clients use a mortgage loan to eliminate their high-interest debt like credit cards and unsecured lines of credit. Another option is using a mortgage loan to pull equity out of your house to complete renovations or travel!
What is the ideal mortgage term length?
The short answer is it depends on the current state of interest rates and macro economic market conditions. If rates are currently low but might increase soon, then choose a longer term. If rates are currently high but might decrease soon, then choose a shorter term. Also, shorter terms generally give you better rates.
Does paying bi-weekly actually save me money in the long run?
Yes! The way this works comes down to the number of payments you make per year. If you go monthly, you'll make 12 payments per year. Bi-weekly would be 26 half-payments per year or 13 full payments. So that's one extra payment per year which will ultimately make you mortgage-free sooner!
How much are closing costs?
Closing costs are going to vary for every situation. The costs include items like appraisal fees, realtor commissions, title fees, and legal fees. As we work out the terms of your mortgage deal, I'll help identify exactly what your closing costs will be.
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