Regardless of whether you are a first-time buyer or moving up the property ladder, getting pre-approved is the very first step to make your new home purchase a realty. It’s also one of the most important choices you will make early in the process. It can have a huge impact in the end.
Let me explain why this is so important. Most people walk into their Bank and ask to be pre-qualified for a Mortgage. They are handed down to a Bank Employee who helps them out and gives them a rate. They walk away feeling happy that they have accomplished the first step towards buying a home. Truthfully though that may not be the case.
Not All Mortgage Brokers Are the Same
First, let’s talk about the fact that not all Mortgage Brokers are the same. There are 2 types: ones that work as employees for a bank or credit union and work bank hours. Monday through Friday 9 to 5 and can only offer you a handful of Mortgage products that their bank carries. There is no motivation or hustle to work for you or give you their best as they are in a secure line of work, they have a captive audience as they know people are brand loyal and very rarely do they lose customers. Therefore, banks can treat you poorly and you take it. I’ll give you an example.
I’ve done my personal banking with a major Canadian bank for 25 years. I came across an add that they would offer new clients an iPad. I walked into my branch and asked them for an iPad since I had been a loyal client for 25 years. They politely declined and told me that was for new clients only. That didn’t seem fair so I said “fine, close all my accounts, give me my money, I will walk out the door. Then come back, reopen my accounts and you can give me an iPad” they laughed. Seriously….true story. That is a prime example of how your bank is going to treat you with a mortgage rate, not the best.
Independent Mortgage Broker
Then the other type of mortgage broker which is the kind we prefer: An independent mortgage broker. The ones that work for themselves and can shop around for the best mortgage rate and the right mortgage terms for you and can get any mortgage products from any small and major lending institution including your own bank. Also, they should work for you and respond to your inquiry fast and efficiently. They will take your calls or respond to your emails during weekends and evenings if need be as they work for you and not a major bank and bank hours.
This is critical when it comes time to the actual writing and negotiations of the contract of purchase and sale. There might be some important questions you have regarding your financing and if the person you chose to work with doesn’t work evenings and weekends (which happens to be the times when most deals and offers are negotiated) then you are not going to get your dream home.
Not A True Pre-Approval
Now to explain that critical part where perhaps you did not get pre-approved. Most banks don’t pre-approve you; they make sure your info on their data is correct, give a rate and not explain to you that all the work that needs to be done will not be done until you have an accepted offer. Likely they will need AT LEAST 5 business days to complete the task. This is not the strategy to win multiple offers in this crazy market. If you work with an Independent MB they would have put in time and effort to give a proper pre-approval. They would most likely be able to satisfy those conditions in 2 days. In some cases if your financial situation is very healthy then they might not need any time at all. This is the type of professional you want to have to secure a home in this market.
Choose Your Real Estate Team Wisely
The most important thing to remember is that everyone who you pick to be part of your Home Buying team (real estate agent, mortgage broker, home inspector, insurance agent and lawyer) must give you great service and advice. Period. They need to work hard for you and give you their best. So next time you walk into your bank ask yourself, are they working their best for me? That should give you the answer you need to decide if they should oversee mortgaging your next home.