Many first-time home buyers find a realtor, search for a condo they think they can afford and then celebrate once the offer is accepted. Frequently first-time home buyers make their bid based on a brief discussion with their financial institution; unfortunately, going this route means financing occasionally falls through.
This is one reason why more than 50 percent of first-time home buyers secure their loan through a mortgage broker, rather than relying on a financial institution.
Mortgage brokers are hyperfocused on their area of expertise: getting buyers into not just the right home, but the right loan as well.
According to a mortgage broker who operates in the red hot housing market of Metro Vancouver, brokers take that extra step of looking at all possible options for clients. When a prospective home buyer approaches her, she said she doesn't just come up with a random number of a pre-approved mortgage limit based on income, but instead finds the best possible solution based on a comprehensive examination of the client's specific needs.
"So they can say, my mortgage broker talked to me, they know what I'm capable of, and they've given me a real assessment of my situation, so I can comfortably go out and buy in a market that I can afford," said the Vancouver based-broker.
Affordability is a looming concern, particularly for first-time home buyers, and not just for markets like metropolitan Toronto and Vancouver, where the median single-family home now lists for $916,567 and $1.49 million.
Many first-time home buyers will start out in satellite communities of big cities and commute in order to get into their own place. Some will even move to more affordable areas of Canada, said one mortgage broker who operates out of Calgary and Lethbridge where median home prices have actually declined from last year's numbers.
Regardless of market conditions, he said it pays to have a broker's creativity on your side. "Rate isn't everything. There's so much more to a mortgage than just the rate, whether it be the penalty calculations, the pre-payment privileges, or their online access. A mortgage broker can really navigate the pros and cons before signing on the dotted line," he adds.
Mainly, it's about offering tips and advice: Know your credit score, develop a budget, learn key mortgage terminology, determine what you can afford, get pre-qualified, and talk to a mortgage professional.
Many first-time home buyers, tend to be young, busy, and unable to get to the bank during regular business hours. That's where brokers shine, reaching out to millennial buyers on social media, via email, or returning text messages after work hours. Brokers are there to help explain the entire mortgage process from start to finish. They're much more than a mere mortgage calculator.
It's not just about understanding market conditions and lending rates either; brokers know when new government laws are handed down that help buyers, they know about property transfer tax exemptions, and they are well-connected with realtors and financial planners.
Mortgage brokers are fairly easy to find. After word-of-mouth from friends and family, social media is one of the strongest forms of referral.
This content was produced by The Globe and Mail's Globe Edge Content Studio, in consultation with First National. The Globe's editorial department was not involved in its creation.