4 questions to ask your mortgage broker at your first appointment

If you are in the market for a new home, one of your first steps is to schedule a meeting with your mortgage broker! The home buying process is a busy one, and it’s best to start things off by chatting with your broker about your plans, goals, and needs. If you’re unsure how to start the conversation, we’ve put together four important questions to ask your mortgage broker during this first meeting. These will help you feel more comfortable and confident as you enter the housing market!

#1 How is my buying power calculated?

Right off the bat, you will likely want to know how much home you can afford. Your budget will play a huge role in your home buying experience. Your broker will sit down with you to discuss how your budget is calculated, and they will help you determine the perfect number for you. Your buying power is, of course, largely based on your income. The amount of money you bring in will have a large impact on how much financing lenders will be willing to offer you. However, there are other factors to consider as well. For example, you will want to understand your current expenses and debt levels. These both take away from your income, so they will affect how much money you can truly afford to spend on a home. 

If you haven’t done so already, getting a mortgage pre-approval is the best way to gain an understanding of what you can afford in today’s market, with your current situation. Your broker can help you with this process, and they will answer any questions you may have about what your pre-approval means. While it is not a guarantee of financing, it shows you where you stand, and what you may be able to afford if you applied for your mortgage today. You can work with your broker to form a plan based on your pre-approval to help you secure the best product when the time comes.

#2 How do the current market conditions affect me?

While much of your buying power depends on your own finances, current market conditions also play a large role. The real estate market goes through constant changes in terms of average prices, supply and demand, and mortgage rates. Sometimes the market attracts lots of first-time buyers, while other times it’s trickier for new buyers to break into the market. The area you want to buy will likely also go through its own ebbs and flows in terms of listings and availability. When you meet with your broker, you will review your budget and buying requirements, and compare it with today’s market. From this, you can form a plan in regards to how you will move forward to ensure you have the best market experience possible.

#3 How big should my down payment be?

When buying a home, there are certain rules around the size of your down payment. The minimum down payment depends on the price of the home you are purchasing. If the home costs less than $500,000, buyers need at least a five per cent down payment. Homes between $500,000 and $1 million require five per cent on the first $500,000, and 10 per cent on the rest. If the home is above $1 million, you need a full 20 per cent saved up.

The size of your down payment depends on how much you have saved up, as well as your budget. For example, if you have $200,000 saved, this would let you contribute a 20 per cent down payment if you were looking at a $1 million home. However, this doesn’t mean you have to! You could also buy a lower-priced home and save some money. You don’t need to spend every cent of your down payment savings if you find a home that meets your needs and you can secure it with a lower down payment. This is a good discussion to have with your broker. They will help you weigh the pros and cons of every option you have so you can be sure you are making the right decision.

#4 What type of product might be best for me?

Of course, you should be sure to ask your mortgage broker about mortgages themselves! You will want to review whether a fixed-rate or variable-rate mortgage is a better fit for you. With a fixed rate, your mortgage rate will not change throughout your term. This means that even if interest rates rise or fall, you are locked into your rate. A variable-rate product, on the other hand, comes with rates that fluctuate according to changing interest rates. 

A fixed-rate product offers you structure and predictability, but this means you will not benefit if interest rates dramatically fall during your term. Conversely, you have much more flexibility with a variable-rate mortgage, but if rates were to sharply increase, you would pay the price. This is an important discussion to have with your broker, as certain people are better suited for certain products. Market conditions also play a role in determining which option might be the best fit for you.

Your first meeting with a broker might seem a bit overwhelming, but it doesn’t have to be! This is meant to be a stress-free introduction to your needs and goals as a buyer. If you ask your broker the above questions, you are immediately putting yourself on the right track. If you want to feel even more prepared, you can start collecting documents that you will likely need to present to your broker and lender down the road. These include proof of income, T4s, and bank statements. Of course, you are also welcome to ask any other questions that come to mind during your meeting. We are here to help you reach your goals!

If you have any questions about your mortgage, get in touch with us at Clinton Wilkins Mortgage Team! You can call us at (902) 482-2770 or contact us here.