This is Jeff O'Leary – "The Village Guru" Mississauga Real Estate Broker and in today's video I'm going to go over 6 awesome questions to ask your lender BEFORE you get a mortgage in order to understand the process and get the best deal possible. This video is great for first-time home buyers and home buyers in general. So without any further ado, let's
get right into it! In today's video we're going to go over 6 questions I definitely recommend you asking a lender it's gonna give you a lot of information and hopefully get you the best outcome possible Question #1 – How much do you qualify for? I'll get a lot of homebuyers call me up all excited to start the process and they'll say, "Hey Jeff, we went to our bank and we've been" "qualified for a mortgage up to $600k let's start the home buying process!" and I'll be like, "Congratulations" and then the first question I'm going to ask them is, "does that include condo fees?" because lenders what they do is they look at how much money you make and they calculate the average carrying cost of the home, your debt…
And they come up with a ratio and they say, "okay based on that you can afford a house like this" However, they include condo fees as an EXPENSE. So if you qualify for a $600K home but instead you buy a $600k condo with $400 a month condo fees those additional fees are going to eat into… the amount of money you can borrow. So if it's a condo maybe
you can only borrow $550k… So it's important when you talk to your lender that you clarify between freehold and condo so you really get a good idea of what you qualify to buy.
Question #2 – have your lender
or mortgage person calculate ALL the costs associated with borrowing money and to give you a monthly payment. I always say if you qualify for $700K then have them calculate how much your monthly payment will be based on the rate they're giving you… based on the terms… how much you will have to pay every month on that mortgage. Now tell them to include CMHC and
mortgage insurance if you're under 20% and every other fee associated including
life insurance and and that. At the end of the day you want to know your total costs and I don't like the sales process when you agree to one number and then at the last minute it's like, "oh, and you need this insurance" or whatever…
So make sure that they go through everything ahead of time and be really clear you want no surprises after the process has started. Question #3 – Have them
explain the difference between between 'Fixed-Rate' and 'Variable Rate' because what you'll find is variable rates are obviously better than fixed rate however depending on your situation you want to know what product is right
for you so it's very important to have them explain it and also have them to explain that if you do go variable how you maybe can lock it in if
rates start to rise. Question #4 – What's the penalty for pre-payments? You want to be really clear about what you're able to pre-pay on a yearly basis and also what's the penalty if you break your mortgage early? A lot of buyers they go ahead and maybe three years later the go an buy a new home and they don't realize that it's a substantial cost to break that mortgage and the problem is they've already bought a house house so they have to go through with it.
I mean this can go into the thousands! So have your mortgage broker go over a
couple of scenarios with you and don't accept the answer is "three months interest" or "interest differential"… Say, "after two years if I decide to move
what's the penalty going to be?" You need concrete answers you really need to understand how much that penalty is going to be and that's how I recommend you
do it. Question #5 – Ask them how much commission they're making. Seriously, I have to disclose what I get paid in commission and what I find is it's (commission) always slipped in there and they'll talk about 'basis points' and things like that but flat out ask them what is the commission? Especially if you're shopping around because a lot of times mortgage brokers can do things with the commission… and 'buy down' points and that's how you see rates that no one
else is able to give but again… go for quality I'm not saying to kill someone on their commission but… have them disclose it. If they're open to disclosing it then obviously they're straightforward…
A "no games" type of person and if they kind of dance around the question then you've got to wonder about a
lot of other things going on So I just like to ask that question for the heck of it! Now finally question #6. You need to ask about the mortgage
approval process. Too many buyers out there in the market are working with agents that don't know the value of properties… they're buying homes… waiving
their conditions on financing only to find out AFTER the fact that the bank does not appraise the property at the value they thought it was and in that case the buyer is still committed to buying the property they're in a little bit of trouble because the bank will not lend them all the money and they either have to come up with that cash additionally or go to friends and …family it's just not a situation you want to get into. So be upfront with your lender or your mortgage person ask them how this process works and INSIST that any conditions be fulfilled DURING your condition on
That means if you buy the house on the weekend come Monday you call them and say, "Order that appraisal now so it's done before my conditions are up…" "and we know everything is good and I can waive my condition" That's really important because I don't want to see you get caught just because something wasn't explaining you properly. So there you have it! There are 6 Questions to Ask Your Mortgage Person! If you like this video give it a thumbs up subscribe to my channel and share with your friends. Thanks for watching and
we'll see you soon!.