The process of buying a home and securing a mortgage loan to make your purchase can seem a bit overwhelming at first. There are a lot of factors to consider, a lot of new terms to learn, and a lot of choices of mortgage broker or lender. Your satisfaction is going to at least partially rely on your choices.
So how do you choose a mortgage broker? Naturally, you want to get the best deal and the lowest rate. Should you choose a 5-year mortgage, a 10-year mortgage, or one that’s even longer? What about a variable rate vs. fixed rate? What factors influence the interest rate you’ll pay on your mortgage? These are all good questions.
To help sort through all of this, we’ve prepared a detailed guide, with advice in five distinct areas that will help you figure out where to get a mortgage, how to find the best mortgage lenders, and much more. Read on to become better prepared to navigate the world of home mortgages, and learn the keys to choosing a mortgage broker in Alberta.
How to Find a Mortgage Broker
When you’re trying to figure out how to find a mortgage broker, there is a lot to consider. Your mortgage interest rate is of course a driving factor in any decision. But there’s a lot more to it than that.
There are things that you can do to maximize your odds of finding the best mortgage lenders in Alberta for your home mortgage. Briefly, here are five key tips to help you figure out where to get your mortgage. We’ll cover each one in greater detail in this guide.
- Be aware of the lending markets. If you don’t know what the prevailing rates are, what options are available, and what brokers or lenders are available, you’re not going to have as much luck finding the best mortgage lender to suit your needs.
- Improve and maximize your credit score. Better credit means a better interest rate on your mortgage, which translates into spending less money out of your pocket for your loan over time.
- Get pre-approved wherever possible. Pre-approval can help you to save time, and give you a leg up on the competition when making an offer on a home.
- Check and compare rates often. Online rates are not a final estimate of what you’ll be charged, but provide a good reference point to compare lenders. They change daily, so keep up on the latest rates and how they are moving as you search for a mortgage broker.
- Research, read, and ask questions. Use the Internet to research and learn about mortgages. Read the fine print in your agreements or quotes, and ask questions about things you don’t understand or need clarified.
#1 – Be Aware of the Lending Markets
The first step in how to choose a mortgage broker involves becoming and staying aware of the lending markets. You have to learn the key players – the best mortgage lenders in your area – so that you know where to begin your search. It’s also useful to get a baseline sense of the different rates or ranges that are offered by different lenders.
Mortgage duration or length is also a critical factor to understand and compare between companies. If you’re looking for a longer mortgage, such as a 25-year mortgage, you want to ensure that the mortgage brokers you look at offer that option.
Other considerations include variable vs. fixed interest rates on mortgages, whether or not they offer mortgages with less than the customary 25% down payment, and whether or not they are licensed to broker mortgages in your area.
This is often overlooked, but can be a relevant concern with regional and national mortgage brokers, and is always worth checking as part of your information-gathering campaign to become aware of the lending markets and options available to you. Following this advice will set you on the right path for how to find a mortgage broker in Alberta.
#2 – Improve and Maximize Your Credit Score
When it comes to personal finance, your credit score and credit history are extremely important. While credit scores certainly aren’t the only factor in a mortgage lending decision, they’re a kind of shorthand that lenders use to assess the risk of lending you money.
Consequently, those customers who have lower credit scores often have either a tougher time in getting a mortgage, or pay more in the form of higher interest rates. It’s in your own best interest, pardon the pun, to work to improve and maximize your credit score – even if you’re not quite ready to start looking for a home or choose a mortgage broker.
The best place to start is to obtain your credit score from the two major credit bureaus in Canada, TransUnion and Equifax. Scores range from 300 to 900, with 900 being the best and 300 being the worst. The average Canadian credit score is 600. Anything below 550 or so might make it hard for you to obtain a mortgage.
You can get your free credit report directly from the agencies (instructions are available on their websites), or through third-party companies (though the third parties may charge a fee or enroll you in monitoring programs).
Obtaining your credit report is about more than just getting your score. This will let you know what your score is, but more importantly, what items in your financial history, past or present, are either helping or hurting your score.
You can then use this information to address things that are hurting your score, and take actions to improve in those areas. For example, you can pay down higher-interest debt, lower your total debt, consolidate or pay off credit card balances, and correct any errors that may be on your reports.
Paying your bills on time and being a responsible user of credit is also very important to maintaining and improving your credit score over time. The greater number of steps you can take to improve your credit score, the less you’ll end up paying on your mortgage.
It will also increase your options for choosing a mortgage broker, as often, the best mortgage brokers offer the best deals to the best, most-qualified clients.
#3 – Get Pre-Approved Wherever Possible
Once you’re starting to consider looking at homes seriously, and thinking you might soon be ready to make some offers, it’s time to get pre-approved. Choose from some of your top results – the best mortgage lenders who offer the options you desire – and start the pre-approval process with a few of them.
This involves some forms and documents that you provide to the mortgage broker, who in turn will evaluate your finances and means, and provide you with a pre-approval letter. It indicates how much house you can afford, and that you’ve been “checked out” by that mortgage lender and can obtain the mortgage.
In terms of how to choose a mortgage broker for your ultimate mortgage loan, the pre-approval process has an added benefit. The loan forms you receive as part of your pre-approval will give you a loan estimate, that usually highlights the interest rate or rate range that you qualify for, and what that will translate into in terms of monthly payments.
This will allow you to evaluate your prospective choices for best mortgage lenders on an apples-to-apples basis, and find one that has the most advantageous bottom line for you.
#4 – Check and Compare Rates Often
Even after you’ve been pre-approved, market interest rates will continue to change. They change daily, like so many other financial measures. You should check and compare rates often. You don’t need to get your pre-approval re-run by your lenders all the time, of course.
But knowing where the market is when you get pre-approved, and where rates are moving in the following days and weeks, will help you to negotiate for the best rate. If there is a substantial change in the market, you’ll want to be sure that is taken into consideration, and expect a lower overall rate than that which you were pre-approved for when it comes time to actually originate your mortgage.
The best mortgage lenders will always try to work with you and give you an updated rate before you sign on the dotted line.
#5 – Research, Read, and Ask Questions
Perhaps the most important advice we can offer is to do your research and learn about mortgages and mortgage-related topics. By reading this guide to how to choose a mortgage lender, you’re already well on your way toward following this piece of advice.
You should also be sure to read through all the details and fine print of your pre-approval and any mortgage agreement before you sign it.
Part of the process of how to find a mortgage broker that’s the best choice for you is finding one that you feel comfortable talking to and working with. You’ll want to feel able to ask them questions about things you don’t understand or need clarified.
You’ll also want to be confident that they’re giving you complete and thorough answers to help you in your decision-making. Being a well-informed customer can often be the difference between getting an average deal and an outstanding one from the best mortgage lenders.
Consider Max Capital Financial
If you live in Alberta, one of the best mortgage lenders you can choose is Max Capital Financial. They’ll work with you to answer your questions, provide you with options for your mortgage, and help to get you the best possible rate.
If you’re wondering how to find a mortgage broker in Alberta, consider Max Capital Financial. When you choose Max Capital Financial as your mortgage broker, you’re getting more than just a mortgage – you’re getting a partner who can help you navigate the world of home mortgages, and maximize your chances of finding and financing your dream home.