TOP 5 REASONS PEOPLE DON’T QUALIFY FOR A MORTGAGE There are many reasons for getting declined, here are the most common. 1. LACK OF DOWN PAYMENT: The minimum down is 5% of purchase price. This amount must be saved, not borrowed. However a gift from immediate family member is acceptable. It can also come from your RRSP’s. 2. INSUFFICIENT INCOME: Often people purchase a home thinking they can afford it when they can’t. This is a waste of everyone’s time. Get pre-approved first, and not by a bank because it is worthless since the banks do not check your credit or verify your income. We do so you can count on our pre-approvals. 3. NEW MORTGAGE RULES: If you have less than 20% down the maximum gross debt service ratio allowed is 39% of your income versus 32% for less than stellar credit. Including consumer debt the ratio is 44% of income, 40% for poorer but still acceptable credit. 4. CREDIT ISSUES: If you have been late on credit card, loan, cell payments your credit score will go down. If any delinquency has been sent to a collection agency your score will drop like a stone. Too many credit inquiries in a short period of time by you also lowers your score and will stay on your report for 7 years. The banks will automatically decline you. If the issue is isolated or a blip with overall good history, we can help you. KNOW YOUR SCORE. The banks will not advise you on credit. We do. Will pull it for you and give you professional advice to set you straight. 5. TOO MUCH DEBT: Many people have bad spending habits and are poor with finances. You can no longer refinance your home above 80% loan to value to payoff high interest debt. Most do not understand what their capacity or limits to borrowing are. When buying a house you can get approved only to be declined later if you make purchases (new car, truck etc) before you close your purchase. We see this happen too often. Effectively your debt service ratios get checked again prior to closing and they have become too high. We always advise our clients not to buy any big ticket items until after they are in their new home. If you are a first time home buyer (even if you are not but have some debt load), it is essential that you come to us first (not a bank) to review your credit situation. We are experts and will give you invaluable advice going forward.
Month: November 2015
WHY YOU CAN’T RELY ON A BANK MORTGAGE APPROVAL 1. PREAPPROVAL: Well it starts with the pre-approval you get from your bank. They tell you how much you can afford and you go out and buy a home only to get declined. Shocking? Embarassing? Yes both. But Why? Because the bank does not check your credit, your employment or income, so their so-called Preapproval is worthless. We see this all the time. 2. CREDIT: Do you know that after you have been approved for a mortgage for a house you bought that the bank does another check closer to closing? Yes and if you miss any payments on other credit items, you are toast, done like dinner. 3. CHANGING JOBS: If you change your job between the time you bought a home and close the purchase, the bank can cancel your mortgage and you are liable to the sellers. 4. BUYING A VEHICLE: Happens all the time. Bank approved purchasers get declined because they went out and bought a new car or truck. The bank declines them because they can no longer meet debt servicing requirements. 5. DOWN PAYMENT: The bank finds out you have borrowed your down payment. A big NO, NO and they pull their mortgage approval. Circumstances like these happen every single week of the year, probably daily across the country. A stream of people come to us throughout the year under great stress asking us to help them from losing the home of their dreams. The difference between going to the bank and coming to us is well, night and day. The banks want your business but only if you are pristine. The big problem is that it is easy to get a bank approval, but because they do not give you any professional advice whatsoever, to ensure you don’t do anything to mess things up, you are vulnerable to Murphy’s Law, which is, “Whatever can go wrong, will go wrong.” Those who choose us first are informed. They understand that such a big investment should be put in the hands of professionals who will give them the best advice and mortgage product/solutions. We are licensed specialists and mortgage professionals who care about you and want to make sure your home purchase runs smoothly. The banks sell multi products and simply do not have the expertise we do to better ensure and optimum solution. And we go to great lengths to educate your about the process, so that your expectations are realistic and there are no unpleasant surprises. For your next mortgage, isn’t it obvious who you should call?