Buying your first house is an exciting experience. The pleasure of purchasing a place to call your own is matchless but the process can be overwhelming. This is because buying a house is often the biggest financial transaction of your life which means you can’t afford to make any ill-informed decision.
Buying a home involves many steps and one of the most crucial steps is researching home loans or finding the right mortgage broker. Securing the right mortgage deal is of utmost importance because if you settle for the wrong product, it could cost you thousands of dollars over the course of a mortgage term. So, to avoid such a nuisance, it’s worth seeking expert help with this decision.
Hiring a mortgage broker is a great way because these professionals can hunt the best mortgage deal for your circumstances. But when it comes to choosing the mortgage broker, it’s important to know where to start or what type of questions to ask your broker.
Just like you search for the best property, you need to shop around and find the best mortgage lender that fits your needs. With that in mind, here are the most important questions to ask when you visit a mortgage broker.
What kind of mortgage broker are you?
The mortgage broker you choose should be licensed to carry his/her services. At the time of your first meeting, you need to ask the broker his type and the products they arrange most often. There are some mortgage brokers who work exclusively for a single financial institution and arrange only those products that the institution offers. There are also some who are tied to multiple institutions and deal with their products. However, it’s best to look for the independent mortgage broker because they represent the entire market and offers unbiased products. So, make sure you ask their type and know the products they usually arrange.
What type of mortgage is best for me?
The mortgage broker you meet should assess your financial condition in order to find the best deal to suit your circumstances. It’s during your initial meeting that you should ask which type of loan is right for you. An experienced mortgage broker will explain to you the different types of loan options and will clear your doubts about the fixed-rate mortgages, interest-only loans, ARM, discount mortgages or tracker mortgages. By way of explaining the types and considering your finances, the broker will suggest you which option is likely to be the most suitable for you. If you’re a first-time buyer, you need to know the difference between fixed-rate and adjustable-rate mortgage loans.
Fixed-Rate mortgage loans have a fixed rate for the entire loan period and offer stable financial planning for your mortgage repayment. An adjustable-rate mortgage (ARM) loan, on the other hand, is for homebuyers with less up-front cash because it has a lower initial rate which usually ‘adjusts’ annually.
What fees can I expect to pay?
The next important question is what fees will be included in your loan and what fees will be due at closing. When it comes to getting a mortgage application approved, the homebuyers are expected to pay some costs and fees such as lawyer and notary fees, appraisal fees, home inspection charges, title registration, property tax, and credit pull fees. No matter which type of loan you take, you’ll need to pay the lender fees which typically include origination fees, the cost of writing the loan, and closing costs. So, to avoid any surprises down the line and plan your budget accurately, make sure to ask your broker about these costs ahead of time.