First things first: What's the difference between me going to my bank and going to a mortgage broker?
When you're making a huge life decision, you want someone that holds your best interest as their priority. Just as you wouldn't shop in a store that sold one pair of pants in only one size, the exact same mortgage doesn't make sense for everyone. I have no pressure or quotas to send clients to one lender over another, so I can focus on what's right for you. A broker works alongside you for the life of your mortgage, watching the economy, answering your questions and taking care of things that you probably don't have time to worry about. Also, I take my clients out for coffee. Beats drinking bank coffee any day.
How do I figure out if I'm financially eligible to even be thinking about buying a house?
We do that together. We determine eligibility by using debt to income ratios. Including property taxes and heat, your home and other debts cannot equal more than approximately 40 percent of your income. We also look at credit worthiness. Have you paid your bills on time? Is your credit maxed out? If you work for yourself, we look at your income over a longer period of time to show consistency. Your payment history on your cell phone bill also shows up on your credit report now. More importantly though, does it make sense for you? What can you afford? Do you need to adjust your lifestyle to own your own home?
I'm worried about scraping together enough for a down payment. What are my options here?
For all mortgages in Canada, you need to have a minimum of five percent down. While there are a couple lenders who offer cash back for your downpayment, these types of mortgages are expensive, and only make sense for a select few. Oftentimes, parents or grandparents are able to help by giving you a gift for your down payment. This does have to be a true gift and cannot be loaned.The truth is, it's hard to save when you have student loans and rent. Oftentimes saving means being a little uncomfortable, sometimes taking money from something you enjoy or want for long-term gain.
At what point during the search should I be meeting with a broker?
A mortgage broker should be your first step on a home buying journey. We can sit down and figure out when you will be ready to buy a house---maybe it's right away, maybe not. Sometimes it has taken a couple of years getting clients to a place where they are ready to purchase their home. Most realtors will ask their clients to be pre-approved before they start showing them houses, and it really helps to know what you can realistically afford before going to see potential homes.
Making a plan to pay off my mortgage stresses me out. Should I be thinking about that at this stage?
No, that is something we can work through together. Things as simple as having your mortgage payment come out every two weeks instead of every month can cut considerable time off of the length of your mortgage. When times are good, we can easily increase your payments, even slightly, and when times are lean, we can bring them back down to the original amount. That's not something you need to stress about, because with minimal effort, and great planning it can be fairly painless.