Your mortgage broker isn't a mind-reader. They don't automatically know what you want out of a mortgage, and what worked for a previous client probably won't be the best choice for you. Before your mortgage broker goes shopping around your mortgage application to different lenders, have a conversation about these three things.
- Your short-term and long-term goals
It may seem as if your mortgage broker is only there to help you secure a mortgage, but in order to get you a mortgage that best suits your needs, you need to tell them where you plan to be a year, three years, five years down the road. If you’re planning on moving in a few years, for example, your broker may want to look into options that include a portable mortgage
feature. Another example is if you think you might want to do a home renovation in the near future and may refinance your mortgage in order to pay for it. In this case, your mortgage broker would want to shop around for a mortgage with the lowest prepayment penalties and fees. Conversely, if you want to buy your forever home with no plans on moving, then your broker is free to strictly shop around for the lowest interest rate possible. In any event, they need to know your whole story before looking for a mortgage for you.
- Your source of income
It’s not enough for your mortgage broker to know how much money you bring in each year. Different lenders will work with different sources of income to varying degrees, but generally speaking, if you have a traditional salary and source of income, then you have more options available to you, while if you own a small business or do freelance or contract work, then not only are your options limited as to which lenders will work with you and what interest rate you’ll pay for your mortgage, but you have different requirements when it comes to proof of income. Make sure your mortgage broker knows how you make your money before they find you a mortgage from a lender who won’t work with your situation.
- How flexible you are
Everyone has payments that they have to make each month, but if you have a lot of set expenses or if you don’t have any extra money left over after everything has been paid, that affects what kind of mortgage you need to have. A fixed rate mortgage
means that you are paying the exact same amount for the life of your term, and a variable rate mortgage
means that your mortgage interest rate will change over time, which may affect the amount of your monthly payments. Make sure your mortgage broker knows your cash flow situation so that you don’t end up with a mortgage that requires more flexibility than you have.