Credit Scores, Pre-approvals, Lenders....Where Do I Start?
Buying your first home can be scary. Where do I start? Who do I speak to? Do I really want a bunch of salespeople like realtors and mortgage brokers that just want the sale?
I hear you, making the decision to buy your next home isn't like heading over to Amazon and reading the review and making a decision. There is a lot of thought that needs to go into the decision. Where to buy it? How? When? How long will we live there?
All of these questions are important. I'm here to tell you if you are working with a great agent and broker, our job is to ensure you are taken care of for the entire process and in my case after as well.
But where do you start?
93% of buyers currently start their search online on websites like realtor.ca or an agent's website. It's very easy to search online and put in your own criteria of what you want to see all the wonderful homes available to you. But are they? Can you afford them?
If you are just window shopping, have at it. I personally love viewing homes that are $2.0m plus just to see what's out there. But is that realistic for me, no way. But again, I'm not in the market to buy something right now. You are.
So is this the best use of your time? Not really. Doing this only toys with your emotions and gives you a set of expectations on the type of home you can potentially purchase that might be outside of what can actually work.
I can tell you stories for days about individuals that reach out online via my website or realtor.ca to view a property that hasn't even spoken to their bank much less a mortgage broker. Usually, when I ask if they have spoken to a lender and the answer is no, the viewing doesn't usually happen.
But enough of the lecture. What is the best process?
A mortgage pre-approval as defined by TD bank is "A mortgage pre-approval is an important part of the home buying process. If you are pre-approved, it means that a lender has stated that you qualify for a mortgage loan based on the information you have provided, and subject to certain conditions. A mortgage pre-approval often specifies a term, interest rate and principal amount."
When you have a pre-approval you aren't guaranteed anything. Its purpose is to provide you with an expected amount you can spend with certain criteria about the property. For example, you can qualify for a condo worth $350,000 but the condo fee cannot be more than $600/month or the taxes have the be below a certain amount.
The pre-approval arms you with the knowledge of knowing what you can afford. Personally, I tell my clients that the pre-approval amount needs to be boiled down to your month to month budget to ensure you can afford the home as well as savings, trips, child expenses, etc. Sometimes that number doesn't work and that is okay.
But the second part of that definition is also important. You are provided with a specific term, interest rate and amount. The interest rate is key because if you are pre-approved for a rate, in most cases you get that rate if the bank rate increases. If the bank rate decreases, you get the lower of the two.
Knowing this information before you see property is critical so that you are properly armed to purchase if you find the right home. It puts you in a better negotiation position because you have leverage over other buyers that did not take these steps.
Who can you speak to to start the process? Who can you trust to serve you?
Of course, I'm going to say you and I should speak to one another and you can tap into my trusted network of brokers and banks. But you need to speak to someone you can build a trusted relationship with. If you think about your relationship with your realtor as one of where you are the football heading in for a touchdown and your realtor is your quarterback. Here are the plays:
First down pass to the mortgage broker to ensure we get a good field position
Second down run to get you within scoring range with the purchase offer.
Third down pass to trusted inspectors to get the touchdown.
Feild goal with the lawyer to get the extra point
Our job as your agent is to first and foremost care for your needs and ensure you are set up for success. If the quarterback doesn't have good receivers there is no chance of success.
But even with the agent, you have to use someone you trust to take you to the end and thereafter.
The brokers I work with are all of the same mindset. Your home purchase isn't just a number for us, it's a lifelong relationship that we continue to cherish. When you have people surrounding you with that mindset, understanding the next step is a breeze.
So if you are considering a purchase and are surfing realtor.ca let's chat about how I can help you with the process to save you time and get you set up for success. It would be my pleasure to help where I can.
My hope is to build this community and grow those I can help. Have any friends or family you think could benefit from this information? Share this post with them or let's connect and I can reach out to them.
I just wanted to share this nice little video about why I work referral only. I hope it can shed some light on our profession and why I cherish each and every relationship I have the great fortune of developing.
Thank you once again. Take care and stay safe.