Bank or Mortgage Broker...

So you think you are ready to buy your first home.  What do you do now?

The first thing I would recommend is that you get pre-approved for a mortgage. Some buyers make an appointment directly to their bank or credit union and others seek out a mortgage broker.  Which ever you choose, when you are pre-approved, you will know exactly how much you will be eligible to borrow and you will get a very clear sense of how much you can afford.  Once, you are pre-approved you will be guaranteed a particular interest rate for a certain period of time and it will be locked in.  A locked in rate protects you if the interest rates happen to go up while you are still searching for your perfect home.   If the rates go down, however, you will still benefit from the lower rate. 

Do I go to the Bank or do I see a Mortgage Broker?

If you have a good relationship with your bank or credit union that may be the best place for you to go.  The biggest difference between a particular bank or mortgage broker is that your bank will give you the rates and terms from what only they offer.  A mortgage broker, on the other hand, will shop around for you.

Can't I just shop around for the best rates myself?

You could, but you need to bear this in mind.  When you visit a bank they will pull your credit report.  When you go to the next bank, they are going to pull your credit report too and so on.  Each time you have your credit report pulled it becomes a further detriment to your credit score.  A broker only has to pull your credit report once and can shop around to many banks and lenders without further detriment to your credit score.

What do I need to provide my lender?

Once you have selected your lender, you should ask what specifically you will need to bring with you to the meeting.  Be prepared to provide all your financial information and documentation.  Your lender will usually require the following:

• Personal information such as number of dependents and marital status
• Details of employment; possibly including a letter from your employer verifying your salary, your T4, and /or your Notice of Assessment.  Taxation mails you your Notice of Assessment each year after your income tax is completed. (For you lucky ones, it's in the same envelope as your refund cheque)
• Banking and other investment information (RRSP's, savings, stocks, etc)
• Details of your assets (a vehicle, other property, etc.)
• Information on loans and other liabilities (balance on credit cards, other debt)
• Permission to do a credit check

Once your application is complete, you will know how much you can borrow.  You are now ready to go house hunting.

I'm here for YOU.

~Ciao