Put your Power Team together like your Power Outfit
The roles and responsibilities of those involved in a typical mortgage transaction can be likened to the components of a trendy outfit. I’ll highlight the similarities between both while at the same time exploring the expectations you should ask from all parties involved. Let’s start with what I believe is the most important aspect of the “look”.
The Shoes are your favourite Mortgage Professional
We start with the two essential parties to a mortgage transaction, the borrower and the lender. Just like you expect your shoes to ensure stability and protection; it is the function of the mortgage professional to keep each of the parties involved in the transaction fully informed and up to date throughout the process. Mortgage brokers essentially represent and work for both the borrower and the lender and are most often paid a commission by the lender they choose to take you to which means their services are free for the borrower, unlike shoes unfortunately. Some exceptions do apply if private funds are required.
Financial institutions such as Banks, Trust Companies and Credit Unions also have mortgage professionals who are able to help you secure a mortgage; however, unlike mortgage brokers who act as a liaison between the borrower and many lenders, the majority of these mortgage specialists may only have access to the products offered by the lender they are employed with. Again, there may be some exceptions to the number of product offerings available.
The Lenders are the Laces
The lender is any person, group of persons or institution who make mortgage funds available to borrowers. These can be financial institutions; such as chartered banks, trust companies, (mortgage) loan companies, credit and pension funds; mortgage investment companies (MICs); governments or life insurance companies. The lender is the “glue” that holds the mortgage together, similar to how the laces keep a shoe on tightly.
Would you like spray protector for your shoes?
That’s a familiar question when buying a new pair of suede shoes for your perfect outfit. When it comes to mortgages, the mortgage insurer is the spray protectant. In Canada, mortgage financing with less than 20% downpayment must be insured against default by 1 of our 3 insurance companies. The insurers are CMHC, Genworth and Canada Guaranty and their fee also known as the insurance premium is the responsibility of the borrower and is added to the mortgage amount in the majority of scenarios where an insured mortgage is required.
A Realtor helps you pick pants or a skirt
As your realtor will help you navigate through all of your property options you can call them your personal shopper! They provide valuable guidance and expertise throughout the purchase process and are normally paid by the seller of the property you wish to buy with no cost to you as the buyer.
Don’t lose the shirt off your back
A Property / Mechanical Inspector is a qualified home inspector who will evaluate the property and provide a written report on the interior and exterior structure including plumbing, electrical work, insulation, heating and cooling systems as well as overall structural stability. This critical step in the home buying process should not be overlooked as a costly repair that is missed can be a huge expense for a new home owner.
A jacket protects your outfit like a lawyer protects you
A lawyer should be involved in every mortgage transaction as this protects the interests of both the seller and the buyer. You can expect your lawyer to be responsible for the following;
– Assist with and review the Contract of Purchase and Sale
– Preparation and review of mortgage documents
– Ensure all closing documents have been completed properly such as the title search and title insurance
– Explain all closing documents, obtain signatures and file all documents with the appropriate local governments
– Collect the transaction fees and disburse funds to the appropriate parties
– Prepare and present a final Statement of Adjustments
Look in the Mirror and appraise your outfit
A real estate appraiser determines the market value of the house based on its condition and the selling price of comparable homes recently sold in the area. The estimate of market value determined by the appraiser helps the lender decide on a reasonable loan amount for the new mortgage. An electronic property valuation is accepted in some mortgage scenarios, waiving the need for a formal appraisal.
The mortgage process is different for everyone and we get that, there are always exceptions to the norm. Shop around for your power team until you find someone who fits with your vision by asking family and friends for referrals and don’t be afraid to ask for references.