Homes are expensive, so it’s important to know what you should expect from a mortgage agent if you decide to go that route rather than borrowing through a traditional bank.
One of the first things novice home buyers ask a mortgage agent is, “How low a mortgage rate can we get?”
It’s an important question. But when clients ask me that, I ask them to take a couple of steps backward so I can first find out what their ideal living situation would be and see how I can help them accomplish that.
An agent needs to find out what their client’s housing budget is and how that will allow them to keep living their good life and not be house poor. The agent’s responsibility is helping the client realize that, in buying a home, they have to calculate the costs of the blended principal and interest in their mortgage payment; heat, hydro and water costs; home insurance premiums; property taxes; and what they need to put into a savings account to cover home repairs and maintenance.
Once the agent has that amount, they can work backwards to make sure that with the client’s savings or gift from a relative for a down payment and their employment situation, they will meet various lenders’ guidelines for a smooth mortgage placement.
Another key question an agent asks is whether the client has been looking at homes in a certain neighbourhood and in a particular price range. We want them to live in an area of town that works for them and not to just buy a house for the sake of buying a house.
My own strategy is that during our initial conversations, we assess things like risk tolerance and future housing plans to see if we should talk about different options such as variable rate mortgages and additional savings plans. I also want to know about their knowledge of mortgage terms and strategies so they can be made more aware of those issues if required. A discussion can then be tailored that focuses on the client and their specific situation.
An agent then collects a client’s employment, down payment and other documents needed by a lender. Only after this entire process has been completed is it possible to present the rates and term options that best fit a client’s individual situation. By waiting until all the facts are known, the client is assured of getting the best rates and terms possible.
Then it’s just a matter of wrapping up the sale and accepting the key to your new home.
