One of the smartest financial decisions when buying your first condo is to use a mortgage broker. It’s a free service that’s convenient and that’ll save you money in the long run.
What Is a Mortgage Broker?
Mortgage brokers are intermediaries between you and the lender. A broker’s job is to compare mortgages from different lenders to find one that suits your needs.
Mortgage brokers match clients to lenders based on:
- Size of the condo down payment.
- Client’s credit history and profile.
- Income and financial assets.
- Preference between closed or fixed-rate mortgages.
- Specifics of the condo or the property.
Is a Mortgage Broker Necessary When Buying a Condo?
Getting a mortgage for a condominium can be done at most banks and some independent lenders. While you don’t need a mortgage broker for a condo purchase, it’s a huge help.
Reasons to Get a Mortgage Broker
If you’re a first-time condo buyer, you should seriously consider a mortgage broker. Here are 9 compelling reasons to use a mortgage broker for a condo purchase.
#1: You’ll Get a Better Interest Rate
According to a recent CMHC survey, 86% of mortgage broker clients indicated that they chose a broker to get a better interest rate.
Every lender has its own rates and terms. Researching those all on your own can is a time-consuming process. Brokers find deals from a variety of lenders. They do the shopping for you.
How This Affects You – Even small gains in interest rates lead to big savings years down the road. Getting a 3% interest rate instead of 3.25% saves you over $12,000 in interest payments on a $300,000 mortgage paid over 25 years!
#2: Mortgage Brokers Work for You, Not the Lenders
When you work with salespeople from banks, their loyalty is to their employer. In other words, they’re paid to sell their bank’s products. That means they’ll push products that get the bank more profits. Not necessarily what’s best for you.
Mortgage brokers, on the other hand, work for themselves. Sure, they get a commission from the lender once you sign. But their goal is to get you a deal better than what you could find on your own.
#3: Their Services Are Free for You
Mortgage brokers provide many benefits. But the best part one is that it’s free to you!
So how do they earn a living? Brokers are paid a commission by the lender once you sign the mortgage. The commission ranges from 0.5% to 1.25% of the loan amount. How much they get depends on the type of loan and the lender.
#4: Brokers Have Access to Lenders Not Open to the Public
There is a good chance you can find good mortgage deals on your own. But brokers have access to lenders you don’t. This wide range of options translates to more chances you’ll get a good interest rate.
What This Means For You? Some lenders don’t interact with the public. They have no overhead for the public like branches a bank. Because expenses are lower, these lenders usually offer competitive interest rates.
#5: You’ll Get Pre-Approved Faster
A pre-requisite before shopping for any type of condo is getting pre-approved. Without it, real estate agents won’t start the process since you have no point of reference of what your final budget is.
Unfortunately, getting pre-approved is a tedious and painstaking process. You have to visit banks, deal with appointments and listen to sales pitches.
But a with a mortgage broker, all you need to do is fill out a form, make a phone call and the rest is taken care for you. Once pre-approved, you’ll have an amount lenders will likely approve a mortgage for.
Note – It’s not because you’re pre-approved for an amount that you automatically qualify for a mortgage. Once you place an offer on a condo, the lender will review the deal and make the final decision.
#6 They’ll Save You Time by Shopping Around for You
Most of us lead busy lives. We simply don’t have time to search for lenders and go to meetings to find deals.
Thankfully, mortgage brokers do this for us and save us a ton of time. They have direct contact points with lenders. In an hour, a broker can get more condo mortgage offers than you could spending week’s worth of evenings.
So if you still want a good mortgage without having to search far and wide for it, consider a mortgage broker.
#7: An Expert in Condo Financing Is Available to Answer Your Questions
Unlike bank employees, mortgage brokers have industry-specific expertise. They’ve seen dozens, if not hundreds of condo purchases go through.
Purchasing a home of any kind involves closing costs. You’ll also have to deal with tons of fancy finance terms. Your mortgage broker can clarify all these points in a quick phone call.
#8: Your Mortgage Broker Can Help You Determine What You Can Afford
Most importantly, your broker will accurately estimate how much your total housing payments will be for a specific property.
All you have to do is call once you’ve found a condo you want to put an offer on. Within a few minutes you’ll be able to adjust your budget and see if you can afford that property.
How This Affects You – It goes without saying that ensuring you can afford your home is incredibly important. The last thing you want is to be unable to pursue your interests because your cash-strapped from mortgage payments.
#9: Brokers Can Get Condo Mortgages for Those With Bad Credit
Having a bad credit score can make it hard to get an affordable condo mortgage. Major lenders see households with bad credit as risky. To cover their risk, they’ll charge higher interest.
Every broker has access to dozens of lenders and is knowledgeable of their niche products. If you have bad credit, the broker may be able to find one these loans for you at a decent rate.
Wrapping Things Up
In conclusion, there are many different reasons to use a mortgage broker to secure your condo mortgage. We believe everyone should use one when buying a condo. It’s free, convenient and comes with tons of benefits.
The post 9 Reasons First-Time Condo Buyers Should Use a Mortgage Broker appeared first on Simple Condo Advice.
