Financing:

Unless you are one of the very rare individuals that Tim works with that can pay for their home with CASH, you will need a MORTGAGE.

There are many types of Mortgages and Financing options.  Below are a few options to help you understand the process.

Broker vs. Banker:

When I started in the business 15 years ago, Brokers were alot different than they are know, and their relationships with the Banks were different as well.  Typically 15 years ago most of my Clients were in a relationship with their Bank, using a Broker usually ment fees and bonuses.  The type of Client that used a Broker was one that needed a second mortgage, not a Client who was price shopping.

Today that has changed, if you asked me if I would use a Broker or Bank, I would recommend a Broker.  The reason for the recommendation is because I believe that Banks expect you to use a Broker.  My rational for saying this is because not only is it my experience that you are more likely to obtain a more favorable Mortgage Rate through a professional Broker, but the Banks now pay the Brokers fees, and in some cases on higher volume Brokers the Banks will through in fees and appraisals.  If you were to walk into a Bank that you did not have a relationship with, unless you were a strong covenant, it is highly unlikely that you would be able to achieve anywhere near the discounted rate that a Broker will obtain on your behalf.  It seems to me that Banks have restructured and expect the consumer to go out and shop.  I then recommend that you get a great Broker and shop. 

A word of caution, if you do have a strong relationship with your Bank, I still recommend seeing a Broker, but it is advisable that you still see your Bank and find out what they are willing to offer. 

Shopping:

Once you have been to a Broker, what happens?  The Broker will go over your financial information, for example what you earn in a year, what your down payment is going to be, and what type of terms are you looking for in a Mortgage.  I will not get into the terms on this website, I will leave that up to the Brokers to go over with you, however be aware that there are a few things to thinks about:

• Amortization:  The length of the Mortgage payed out over,  this is usually 25 years, but can be both longer and shorter.
• Term:  This is the term that your interest rate is held at.  An example would be a 5.0% interest rate for a 5 year term.
• Prepayment:  This is important as if you want to pay your Mortgage out you want to know if there is a cost to doing that at an earlier date than your Term.
• Payments:  You want to know if you can through lump sums at times during the mortgage in addition to your monthly payments, also maybe you would like to double up your payments from time to time.

These are just a few things to think about, ask your Broker to help you answer these questions and more.

The other really important thing to ask your Broker is:

• how many lending institutions that they deal with and,
• how many BANKs do they send your mortgage imformation out to initially

Some Brokers are set up automatically so that once your information is in their system, your information is sent directly out to various different lenders.  Other Brokers manually phone to their various BANK contacts.  If I were being, I would want my information emailed to as many lenders as possible.

Tim Beaumont
Pemberton Holmes
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