All parties – bankers, lenders, mortgage brokers — have a responsibility to perform due diligence with every valued client we deal with. However, there is one step that is either over looked, or not valued, by some folks in this business. And it is a step that I feel should probably be held in the highest interests: placing our clients in a mortgage that will be serviceable not just today, but for years to come.
I’m not sure why some institutions don’t seem to value this aspect when providing their clients with a mortgage. Is it because it is hard thing to do? Maybe. But all it really takes to do this is to provide the best estimation of your balance at the end of the first term as possible, and wager against what future rates might look like.
Let’s start with what we know right now: rates are bound to go up at some point. Just how much they’ll go up… now that we don’t know. That’s where the “wager” comes in. If I wager that rates will be up between 3% and 5% over the next 5 years (or whatever initial term you’re partial to), it stands to reason that I’m doing my best to limit your risk of entering into a “said” mortgage for today.
I’ll also take your estimation of what you think your salary will look like in 5 years. That gives us an idea of what we can expect down the line. From this perspective, we can devise a “likelihood” of what your future mortgage might look like. At the very least, you’re going into this mortgage with an idea of what could happen over the course of this major investment.
Of course, we could be off. Rates could be up 6% to 8%, or maybe even less than 3%. It’s impossible to tell. But by going through a few scenarios, I can help you plan for the inevitable ups and down that come with a mortgage. I believe it is important that you enter into this investment with both eyes open, and that you are prepared for a number of different scenarios.
When a lender tells you what you can qualify for on paper as a maximum mortgage… I highly recommend that you consider letting me play the scenarios first! It’s easy to get starry eyed with how much you can afford on paper today. But by running through the scenarios as we just discussed, I can help you protect your risks today, while taking into account tomorrow’s uncertainties.
This isn’t as wild as it sounds, and I believe it is more than worth the time involved. So before you jump into a mortgage with a bank, let’s run the numbers a few different ways, so I can provide you with a more complete picture
of what you are capable of when it comes to committing to a mortgage. That’s my job, and I love it!
The above blog post is courtesy of Chris Turcotte; a Mortgage Broker and Owner of CENTUM Mortgage Choice in Brandon, MB.
CENTUM Mortgage Choice is Brandon’s Premier Mortgage Brokerage committed to saving you time, money and stress during the mortgage process.