When you want to get a mortgage, you can’t do it by yourself. Unlike finding a house, where a real estate agent is certainly useful but it’s possible to find and bid on a home without one, you can’t give yourself a mortgage (if only!). Here are the three people that you’ll need in order to secure a mortgage.
1. Mortgage professional
The obvious biggie here. Whether it’s a mortgage broker who can get you the best deals and shop a variety of lenders for you or a mortgage specialist at a bank, a mortgage professional is the person who will gather all of your information and submit the deal to the lender. A good mortgage professional will also be able to advise you on the best mortgage for your goals and your financial situation. Your mortgage professional is the one person on your mortgage team who you will be able to choose, so choose wisely.
2. Underwriter
The underwriter works for the lender on the back end of the deal. You will never meet or have any contact with the underwriter, but he/she is arguably the most important person involved in your mortgage transaction. When your mortgage paperwork gets submitted to the lender, the underwriter is the person who actually verifies the information and sometimes makes judgements as to whether or not you qualify for the loan – in other words, the job of the underwriter is to assess how risky you are of a borrower based on whether or not the information that you submit meets the guidelines that are outlined by the Office of the Superintendent of Financial Institutions (OFSI). In addition, each lender may have their own specific guidelines for and rules for mortgage approvals beyond those determined by OFSI. An underwriter’s speed and efficiency at getting the deal done can make all the difference when it comes to how smoothly the mortgage process is for you.
3. Appraiser
An appraiser values homes for a number of situations, not just a mortgage. When it comes to appraising a property for a mortgage, however, the appraiser is the person who will determine whether or the property that you want to buy is valued at the amount that you need for a mortgage. The appraisal is its own process, although it functions as part of the underwriting and the underwriter can’t process the loan without the appraisal. Generally speaking, you won’t have a choice as to your appraiser is, as it is determined by the lender, or your mortgage insurance company if you have less than a 20 per cent down payment. Some lenders will make you pay for your appraisal and some won’t. Home appraisers in Canada are trained and certified by two bodies: the Canadian National Association of Real Estate Appraisers and the Appraisal Institute of Canada. An appraiser provides an educated opinion of a property's value based on its quality and utility using visual inspections as well as looking at the comparable sales in the immediate area, the same as you and/or your real estate agent would do when placing an offer on a home. You also won’t know the exact amount of the appraisal, only whether or not your property has been approved or declined for your mortgage. This is because the appraisal isn’t done to determine the exact fair market value of the home (that comes as part of your property assessment/property taxes later); it’s to determine whether or not you’ve paid too much for the home and whether or not the bank will get their money back in case you default on your mortgage and the property has to be sold.
Without any of these people, you won’t get a mortgage – and for most people, no mortgage means no home. Knowing who's responsible for your mortgage paperwork won't make getting a mortgage easier, but at least you can understand the roles of the people behind the process.
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